exam 1

How has the Great Recession of 2008 -2009 affected​ consumers' attitudes?

(Consumers are showing an enthusiasm for frugality.) -Consumers are moving from mindful to mindless consumption. -​Consumers' attitudes have not been affected by the recession. -Consumers are more willing to indulge in luxuries. -Consumers are less willing to save their money.

The act of obtaining a desired object from someone by offering something in return is known as which of the​ following?

(An exchange) -A barter -A trade -A swap -A sale

Big Data and Artificial Intelligence (AI)

Marketers can use AI to analyze data at lightning speed and apply the insights to engage customers in real time and help them through the buying process. Examples of AI technology include: Amazon Echo's Alexa or Apple's Siri to IBM's almost-human AI supercomputer Watson.

Sarah has started a new​ company, Sarah's Soaps. She has decided upon the overall purpose and​ mission, created detailed objectives to guide the​ company, and performed detailed portfolio analysis. Unsure of her next​ step, she looks to her partner Mildred for advice. What is the BEST advice Mildred could​ give?

-Let the new department heads take over responsibility to test their effectiveness. -Reevaluate the mission statement to make sure it reflects the detailed objectives. -Create a​ growth-share matrix to find cash cows to help fund question marks. -Determine a target market and begin aggressively marketing to them. (Develop detailed marketing and departmental plans that will support the​ company-wide plan.)

Which marketing philosophy holds that consumers will not buy enough of the​ firm's products unless it undertakes a​ large-scale selling and promotion​ effort?

-Marketing concept (Selling concept) -Societal marketing concept -Production concept -Product concept

Which of the following is NOT one of the four Ps of the marketing​ mix?

-Price -Place (Profit) -Product -Promotion

Selling and advertising are part of a larger set of marketing tools that work together to satisfy customer needs and build customer relationships known as​ _____________.

-market offerings -the marketing concept -customer equity (the marketing mix) -​customer-engagement marketing

Business Portfolio

A business portfolio is a collection of businesses and products that make up the company. The best business portfolio is the one that best fits the company's strengths and weaknesses to opportunities in the environment. Business portfolio planning involves two steps. First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Second, it must shape the future portfolio by developing strategies for growth and downsizing. Managing the business portfolio: Most people think Mars as a candy company but it also owns the Uncle Ben's rice brand. Mars is also a world-leading pet nutrition and health-care company. Mars sells more pet care products and services than candy.

Growing Share of Customer

Beyond simply retaining good customers to capture customer lifetime value, good customer relationship management can help marketers increase their share of customer. This refers to the portion of the customer's purchasing that a company gets in its product categories. To increase share of customer, firms can offer greater variety to current customers or they can create programs to cross-sell and up-sell to market more products and services to existing customers. For example, Amazon is highly skilled at leveraging relationships with its 244 million customers to increase its share of each customer's spending budget.

1-4 Summary

Broadly defined, customer relationship management is the process of engaging customers and building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Customer-engagement marketing aims to make a brand a meaningful part of consumers' conversations and lives through direct and continuous customer involvement in shaping brand conversations, experiences, and community. The aim of customer relationship management and customer engagement is to produce high customer equity, the total combined customer lifetime values of all of the company's customers. The key to building lasting relationships is the creation of superior customer value and satisfaction. In return for creating value for targeted customers, the company captures value from customers in the form of profits and customer equity.

Customer Relationship Levels and Tools

Companies can build customer relationships at many levels, depending on the nature of the target market. At one extreme, a company with many low-margin customers may seek to develop basic relationships with them. At the other extreme, in markets with few customers and high margins, sellers want to create full partnerships with key customers. Marketers can use specific marketing tools to develop stronger bonds with customers. Some of the tools offered include frequency marketing programs that reward customers who buy frequently or in large amounts, loyalty reward programs that offer special benefits for customers who buy frequently, and club marketing programs that offer members special benefits and create member communities. JetBlue creates first-rate, customer-satisfying experiences. Its slogan—JetBlue: YOU ABOVE ALL—tells customers that they are at the very heart of JetBlue's strategy and culture. JetBlue's TrueBlue loyalty program offers the usual frequent-flier points and rewards but adds some nice enhancements such as no blackout dates and family sharing. Going further, the TrueBlue program personalizes the customer experience with customized Web and mobile pages, complete with a dashboard that shows available points, JetBlue activity history, connections with JetBlue rewards partners, and trip- and flight-planning links. The TrueBlue motto, "TrueBlue. For your loyalty, we give you ours," reinforces customer relationship.

Customer Needs, Wants, and Demands

Customer needs are the states of felt deprivation. They include basic physical needs for food, clothing, warmth, and safety; social needs for belonging and affection; and individual needs for knowledge and self-expression. Wants are the form human needs take as they are shaped by culture and individual personality. For example, an American needs food but wants a Big Mac, French fries, and a soft drink. Wants are shaped by one's society and are described in terms of objects that will satisfy those needs. When backed by buying power, wants become demands. Given their wants and resources, people demand products and services with benefits that add up to the most value and satisfaction. Target's energetic new CEO, Brian Cornell, makes regular unannounced visits to Target stores, accompanied by local moms and loyal Target shoppers.

2-2 Summary

Guided by the company's mission statement and objectives, management plans its business portfolio, or the collection of businesses and products that make up the company. The firm wants to produce a business portfolio that best fits its strengths and weaknesses to opportunities in the environment. To do this, it must analyze and adjust its current business portfolio and develop growth and downsizing strategies for adjusting the future portfolio. The company might use a formal portfolio-planning method. But many companies are now designing more customized portfolio-planning approaches that better suit their unique situations.

The Changing Marketing Landscape

Every day, dramatic changes are occurring in the marketplace. Five major developments that are changing the marketing landscape and challenging marketing strategy include the digital age, changing economic environment, growth of not-for-profit marketing, rapid globalization, and the call for sustainable marketing practices. We will examine these developments in more detail on the following slides.

Measuring and Managing Marketing Return on Investment (ROI)

Marketing return on investment or marketing ROI is the net return from a marketing investment divided by the costs of the marketing investment. It measures the profits generated by investments in marketing activities. Companies can assess marketing ROI in terms of standard marketing performance measures, such as brand awareness, sales, or market share. Such measures can be assembled through marketing dashboards, which are sets of marketing performance measures in a single display used to monitor strategic marketing performance. Increasingly, marketers also use customer-centered measures of marketing impact, such as customer acquisition, customer engagement, customer retention, customer lifetime value, and customer equity. These measures capture not only current marketing performance, but also future performance, resulting from stronger customer relationships.

1-2 Summary

Outstanding marketing companies go to great lengths to learn about and understand their customers' needs, wants, and demands. This understanding helps them to design want-satisfying market offerings and build value-laden customer relationships by which they can capture customer lifetime value and greater share of customer. The result is increased long-term customer equity for the firm. The core marketplace concepts are needs, wants, and demands; market offerings (products, services, and experiences); value and satisfaction; exchange and relationships; and markets. Companies address needs, wants, and demands by putting forth a value proposition, a set of benefits that they promise to consumers to satisfy their needs. The value proposition is fulfilled through a market offering, which delivers customer value and satisfaction, resulting in long-term exchange relationships with customers.

Criticisms of the Four Ps

Some critics think that the four Ps may omit or underemphasize certain important activities. These include services like banking, airline, and retailing services which fall under the category of products. These are known as service products. Another criticism includes the need for packaging to be included in the four Ps, as it is considered one of the many product decisions. The main criticism is that the four Ps emphasize only the seller's viewpoint. Hence, to cater to the buyer's viewpoint in this age of customer value and relationships, the four Ps might be better described as the four A s. These include acceptability, affordability, accessibility, and awareness.

Forms of Marketing

Today, marketing must be understood not in the old sense of making a sale—"telling and selling"—but in the new sense of satisfying customer needs. In the traditional form, marketing is seen in abundance at shopping malls and in magazine, television, and direct-mail advertisements. Therefore, marketing in the old sense refers to making a sale—"telling and selling." In the contemporary form, marketers have assembled a host of new marketing approaches—imaginative Web sites, mobile phone apps, blogs, online videos, and social media. Thus, marketing in the new sense involves satisfying customer needs. There is much more to marketing than meets the consumer's casual eye. Behind it all is a massive network of people, technologies, and activities competing for your attention and purchases.

What is​ MIS?

-Competitive marketing intelligence -Customer relationship management -An internal database -A customer insights team (A marketing information system)

Which of the following is NOT one of the marketing management​ functions?

-Control -Analysis -Implementation (Promoting) -Planning

Which of the following is NOT part of an overall SWOT analysis evaluation of a​ company?

-Opportunities -Strengths (Strategy) -Threats -Weakness

Today's "Big Data"

Big data presents marketers with both big opportunities and big challenges. Companies that effectively tap this glut of big data can gain rich, timely customer insights. Far from lacking information, most marketing managers are overloaded with data. Accessing and sifting through so much data is a daunting task. For example, when a large consumer brand such as Coca-Cola or Apple monitors online discussions about its brand in Tweets, blogs, social media posts, and other sources, it might take in a stunning 6 million public conversations a day, more than 2 billion a year.

Publics

Financial publics influence the company's ability to obtain funds. Media publics carry news, features, and editorial opinions. Government publics: Management must take government developments into account. Citizen-action publics: A company's marketing decisions may be questioned by consumer organizations, environmental groups, etc. Local publics include neighborhood residents and community organizations. General public: The general public's image of the company affects its buying. Internal publics include workers, managers, volunteers, and the board of directors.

Marketing Information System (MIS)

It is essential for companies to design effective marketing information systems that give managers the right information, in the right form, at the right time and help them to use this information to create customer value, engagement and stronger customer relationships.

Market Implementation

Market implementation is the process of turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives. Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when, and how.

Developing Marketing Information

Marketers can obtain the needed marketing information from internal data, marketing intelligence, and marketing research. Each of these sources are discussed in greater depth in the following slides.

Figure 4.2 The Marketing Research Process

Marketing research follows a process that has four steps: defining the problem and research objectives; developing the research plan; implementing the research plan; and interpreting and reporting the findings. Each of these stages is discussed in detail in the following slides.

Online Behavioral and Social Tracking and Targeting

Tracking consumers online might be as simple as scanning customer reviews and comments on the company's brand site or on shopping sites such as Amazon.com. Or, it might mean using sophisticated online-analysis tools to deeply analyze the mountains of consumer brand-related comments and messages found in blogs or on social media sites. Online listening provides the passion and spontaneity of unsolicited consumer opinions. In a practice called behavioral targeting, marketers use online data to target ads and offers to specific consumers. For example, if you place an Apple iPad in your Amazon.com shopping cart but don't buy it, you might expect to see some ads for that very type of device the next time you visit your favorite ESPN site to catch up on the latest sports scores. Whereas behavioral targeting tracks consumer movements across online sites, social targeting mines individual online social connections and conversations from social networking sites. Instead of just having a Zappos.com ad for running shoes pop up because you've recently searched online for running shoes (behavioral targeting), an ad for a specific pair of running shoes pops up because a friend that you're connected to via Twitter just bought those shoes from Zappos.com last week (social targeting).

The goal of a market development growth strategy is to do which of the​ following?

(Identify and develop new markets for current products of a​ company's market.) -Offer modified or new products to current markets. -Make more sales to current customers without changing its original products. -Buy businesses beyond its current products and markets. -Start up businesses beyond its current products and markets.

A power tool company wants to give its customers access to​ internal, non-public information about how best to use its product in creative ways. What should the company create to provide customers with this​ information?

(A company extranet) -A data warehouse -A company intranet -A company data mine -A company website

Which of the following BEST describes a duty that would fall under the jurisdiction of the​ FDA?

(Checking the quality of food that is served in school lunches) -Ensuring that pollution standards are met by a company -Evaluating whether an advertisement to be aired in public is fitting -Investigating customer complaints about a business -Protecting the legal status of a company

What is​ management's first step when performing a portfolio​ analysis?

(Identify strategic business units.) -Perform a SWOT analysis. -Determine the​ company's goals. -Determine the​ company's target market. -Outline the​ company's mission statement.

Which of the following statements about online research is​ correct?

(Online surveys generally have higher response rates than those conducted by mail or phone.) -Focus groups are rarely conducted online. -It is more expensive to conduct online research than to do a​ mail, phone, or personal interview. -Experiments cannot be conducted online. -Online research is only feasible for large companies.

Which of the following would be good advice for someone that is conducting marketing research in a foreign​ country?

(Reaching respondents in other parts of the world is more difficult than it is in the U.S.) -Language translation will be easy. -Consumers in foreign markets generally enjoy participating in marketing research. -Globalization has slowed​ down, so international research is no longer necessary. -You can easily find good secondary data in most foreign markets.

​Lydia's Lights wants to extend its market into Mexico. Before jumping​ in, the company needs to conduct some​ in-depth research to gauge​ customer's needs,​ interests, and buying patterns. Which of the following is the BEST option for​ Lydia's Lights?

(Send researchers​ door-to-door to collect the data from target consumers.) -Deliver surveys to the target consumers through the mail. -Gather only secondary data to minimize expenses. -Send out a survey by mass​ e-mail to the target consumers. -Set up a call center to be the base for researchers to telephone the target consumers.

Chicago's Best Pizzeria has been operating on the north side of Chicago for over 30 years. Its target market includes​ young, urban professionals who want new​ style, organic pizzas with exotic ingredients.​ However, in recent​ years, the population in the​ pizzeria's neighborhood has been shifting and fewer​ young, urban professionals live there. The population has grown older and wants traditional​ pizza, not pizza with exotic ingredients. Which of the following identifies the​ pizzeria's BEST response to this​ situation?

(Target a new market with a different product.) -Run an ad campaign on the health benefits of pizza. -Be proactive and convince customers that​ "exotic is​ better." -Sell a different food​ product, such as hamburgers or sushi. -Cut the prices on its pizza.

Which of the following is NOT a problem involving the natural environment that marketers need to​ consider?

(The aging U.S. population) -Raw material shortages -Pollution -Greenhouse gases -Government regulations

Tammy's Tap Dancing School currently has several question marks in its business​ portfolio, but it is currently maintaining its market share. At the most recent board​ meeting, the CEO of​ Tammy's Tap Dancing School decided to allocate all of the​ company's profits toward the growth and expansion of this question​ mark, in order to cause the question marks to become stars. What is likely to happen to this​ company?

(The growth of the company will be unpredictable since there is no guarantee a question mark will become a star.) -The company will gain market share and prosper as the question marks are developed. -The company will be unable to sustain​ itself, because its profits will be spent on developing question marks and not on maintaining more profitable SBUs. -The company will not show any growth or change at​ all, because profits will neither increase nor decrease. -The company will go​ bankrupt, because all of its profits will be wasted on uncertain SBUs.

​Tina's Tunes is a music store that has been selling CDs for 20 years. Throughout the last six​ years, sales have continuously declined and profits have almost completely disappeared. The CEO of​ Tina's Tunes believes resurgence is likely to happen soon and wants to continue business as usual. What is likely to happen to​ Tina's Tunes?

(Tina's Tunes is likely to fail because it is ignoring the technological environment.) -​Tina's tunes are likely to prosper as mistrust in the digital age increases. ​-Tina's Tunes is likely to fail because it is ignoring the natural environment. -​Tina's Tunes is likely to fail because it is ignoring the current political environment. ​-Tina's Tunes will experience a rebound as the fear of the Great Recession declines.

A researcher must always evaluate secondary information​ carefully; however, the researcher does not need to ensure the evaluation is​ _________.

(subjective) -accurate -impartial -relevant -current

Which of the following BEST describes the purpose of the customer insights​ team?

-To represent the company to its customers (To create more value for customers) -To advertise new products to customer bases -To instruct other company departments in customer service -To develop new markets of customers for the company

Which of the following identifies a change in the technological environment that could affect the success of a​ business?

-A company packages its product to be twice the size of its predecessor. -A company develops a new battery that costs twice as much as its predecessor. (A company develops a new battery that lasts twice as long as its predecessor.) -A company develops a customer support program that customers rate twice as responsive as the previous program. -A company develops a new warranty that lasts as long as its predecessor.

To be​ successful, why should companies try to adopt a proactive stance on​ marketing?

-A proactive stance ensures that a company will increase its market share. (A proactive stance allows a company to influence the market in its favor.) -A proactive stance allows a company to let the market determine prices for its products. -A proactive stance allows a company to compete with its competitors on quality alone. -A proactive stance allows a company to compete with its competitors on pricing alone.

A colleague needs to collect descriptive data about his​ customer's attitudes. He has not done this type of research before. What research approach would you recommend to best suit this research​ project?

-An ethnographic study (A survey) -Observation -An experiment -Secondary data

Noah's Sporting Goods is having difficulty attaining the credit it needs to expand. What should the company do in order to alleviate its financial​ situation?

-Analyze the finances of one of its competitors (Work out a plan with its financial intermediaries) -Reexamine its relationship with its resellers -Find a new physical distribution firm -Devise a marketing plan with a marketing service agency

Which of the following statements about big data is​ correct?

-Analyzing big data is a very easy task. -Big data actually refers to very small data sets. -Big data is very important because marketers today need more information to make good decisions. Your answer is not correct.D. -Analyzing big data will always lead to useful customer insights. (One result of big data is that marketing managers are often overloaded and overwhelmed with information.)

How do the individual components of a SWOT analysis work together to determine the status of a​ company?

-By developing a marketing strategy that promotes a​ company's highest-selling products in such a way that there is a measurable return on the​ company's investment -By creating a niche in a market that can be exploited by a company to gain the greatest profits -By streamlining a​ company's core processes so that all of the​ company's operations flow smoothly and contribute to the development and sale of its products -By developing a course of action that best determines a core​ market, the proper product to give the core​ market, and how to do so at an affordable price (By ascertaining a​ company's strengths, relating them to​ opportunities, minimizing​ weaknesses, and identifying threats to growth and development)

​_______ consists of the analysis​ tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights and gauge marketing performance.

-CRM -Big data (Marketing analytics) -Touch points -Marketing information

Denim Blue Jean Corporation is a growing company located in Washington​ State, but it is beginning to develop a presence in the surrounding states as well. It sells only one productlong dash—blue jeanslong dash—but it has 12 different lines of jeans that cater to​ men, women,​ children, babies,​ toddlers, and teens. Which marketing organization would BEST suit Denim Blue Jean​ Corporation?

-Combination organization -Geographic organization -Functional organization (Market or customer organization) -Product management organization

The​ demographic, economic,​ natural, technological,​ political, and cultural forces that affect a​ company's ability to serve its customers make up which of the​ following?

-Cultural environment -Microenvironment -Marketing environment (Macroenvironment) -Technological environment

Sky owns a small hot air balloon company in​ Albuquerque, New Mexico. He recently started a Facebook page for his company and many of his customers are asking for​ store-sponsored hot air balloon trips. They believe​ Sky's expertise would make him the perfect guide. Sky decides to host quarterly hot air balloon trips and experiences a huge increase in sales and customer satisfaction. Which of the following is the BEST conclusion that can be drawn from​ Sky's situation?

-Customer insights are emotional and often irrelevant to a small business. (Customer insights can provide valuable information to a small businesses.) -Most small businesses have no way of easily accessing customer insights. -Customer insights are not dependable. -Customer insights can be gained only through costly market research.

A company is conducting market research to determine the best areas to sell its product. It has already determined its research questions. What is the next step of this​ company's research​ plan?

-Define the problem. -Share the data with other companies in similar situations. (Collect the data.) -Determine the best method to conduct research. -Analyze potential data sources.

The role of a​ company's marketing intermediaries is to do which of the​ following?

-Determine which products a company should market -Provide the resources needed by the company to produce goods and services -Manage the​ company's human resources efforts (Help the company​ find, promote,​ sell, and distribute products) -Purchase the​ company's product

Nibbles Pet Food Corporation is in the process of developing its new market strategy. The marketing team has already established the​ company's niche productlong dash—​premium, organic dog and cat foodlong dash—and contracted to sell it in several​ high-end pet stores. The team has also determined the optimum price to create value for customers and still make a profit. What does the marketing team need to do​ now?

-Develop the formula for the organic pet food. (Create a promotion strategy to increase customer awareness.) -Determine the​ company's primary competition in the pet food market. -Work on a line of​ leashes, pet​ brushes, and pet furniture. -Determine the target market for the product.

Cupcakes by Cindy is attempting to gather information about its customers in order to improve its customer service. Which of the following is the BEST place for this company to start to develop an efficient​ MIS?

-Distribute necessary information to the marketing team. -Analyze the information gathered in market research. -Conduct surveys or focus groups to gather information. (Assess the information needs of the company.) -Determine how to use the information gathered by market research.

Dylan Parker owns 27 acres on a farmstead in Iowa.​ Recently, as he was plowing a​ field, he came across a rich silver vein in the ground. Realizing his​ bounty, he decided to open a new business selling silver. Not knowing much about the marketing​ environment, he asks you what he should do. Which of the following is the BEST​ advice?

-Dylan should set his attention to the government markets. (Dylan should focus on the business market and sell the raw silver for further processing.) -Dylan should reach out to reseller markets to sell his silver quickly. -Dylan should focus on the consumer market and sell silver directly for personal consumption. -Dylan should focus on farming and ignore the silver vein.

Numbering 49 million or​ more, this group of consumers is sometimes overlooked because it is less materialistic than other groups and prizes​ experience, not acquisition.

-Echo boomers -Senior citizens -Baby boomers -Generation Z (Generation X)

To exercise their social​ responsibility, many companies are linking themselves to what type of​ marketing?

-Environmental -Generational -Technological ​(Cause-related) -Intermediaries

The​ Children's Online Privacy Protection Act in the United States enforces laws for what​ reason?

-Establishes procedures to avoid unwanted telephone solicitations -Makes​ deceptive, misleading, and unfair practices illegal regardless of injury to competition -Bans the sale of hazardous toys and articles (Prohibits online service operators from collecting personal information from children) -Regulates the distribution of unsolicited commercial​ e-mail

​Connie's Cupcakes has started to grow larger than Connie could ever have imagined. She is having a hard time keeping track of all of the​ business' marketing activities. She knows that she is going to need help to keep her business growing and is looking to hire. Whom should Connie​ hire?

-Frances​ French, her best friend and fellow entrepreneur who would come on as an additional chief executive officer -Cash​ Money, a​ well-educated accountant who would begin working as the new chief financial officer -Craig​ Moore, an extremely successful entrepreneur who is actually looking to buy out Connie and grow the business exponentially -Tim​ Forrest, an operations specialist who would be hired as the new chief operating officer (Noah​ Lopez, a marketing specialist who would be hired as​ Connie's new chief marketing officer)

Which of the following is NOT a step in the marketing research​ process?

-Interpreting and reporting the findings -Defining the research problem -Developing the research plan -Implementing the research plan (Comparing research findings to other studies)

Overall, how has the American population changed over​ time?

-It has become more likely to develop brand loyalty. -It has become closer knit and more​ family-oriented. (It has become more​ diverse, better​ educated, and more mobile.) -It has become​ wealthier, more​ cultured, and more frivolous in its spending habits. -It has become more skeptical about marketing schemes.

Which of the following is a valid concern when it comes to the four​ Ps?

-It is not helpful for​ not-for-profit companies. -It uses the​ buyer's view of the markets. -It does not include services. (It uses the​ seller's view of the market.) -It does not include packaging.

Roper's Radical Racers is an upscale company that sells cars primarily to racecar drivers and movie producers. In the​ past, Roper's Radical Racers marketed itself to the​ fun-loving driverlong dash—the driver who wanted to​ "race with​ life." However, in the current​ economy, Roper's has changed its slogan to​ "superior speed, superior​ savings." Roper's Radical Racers is engaging in which of the​ following?

-Market consideration -Price slashing -Income distribution (Value marketing) -Diversity targeting

MorningLinks, Inc., makes breakfast sausages and has begun to use the​ slogan, "Start Your Day the Organic​ Way" to jump on the​ eco-friendly movement.​ Unfortunately, as soon as consumers discovered​ MorningLinks' not-so-organic​ ingredients, the company began to see a rapid decline in profits and customer loyalty. What was​ MorningLinks' mistake?

-MorningLinks' slogan was not catchy enough. -MorningLinks failed to target the correct market segments. -MorningLinks focused only on breakfast sausages instead of diversifying its product mix. (MorningLinks did not deliver on the promise it made.) -MorningLinks did not properly differentiate its position.

Which of the following BEST describes the research​ relationships?

-Observation is best suited for descriptive​ research, surveys for exploratory​ research, and experiments for causal research. -Observation is best suited for exploratory​ research, surveys for causal​ research, and experiments for descriptive research. -Observation is best suited for causal​ research, surveys for exploratory​ research, and experiments for descriptive research. (Observation is best suited for exploratory​ research, surveys for descriptive​ research, and experiments for causal research.) -Observation is best suited for descriptive​ research, surveys for causal​ research, and experiments for exploratory research.

Which kind of company would most benefit from conducting marketing​ research?

-Only​ medium-sized companies that are about half the size of Disney and IBM need market research. -Neither large multinationals like Disney and IBM nor small locals truly need market research. (Both large multinationals like Disney and IBM and small locals truly need market research.) -Only small locals like​ Beatrice's Bistro need market research. -Only large multinationals like Disney and IBM need market research.

​Beverly's Burgers came under fire recently when allegations were made that its veggie burgers were actually made with beef. To counter the​ claims, the restaurant called in a company to test not only its veggie burgers but also the rest of its vegetarian options to prove they lacked meat. The results were displayed publicly on the​ restaurant's Facebook page. What BEST describes​ Beverly's Burgers response to the​ allegations?

-Passive -Steadfast -Reactive (Proactive) -Determinative

A​ company's value chain is only as strong as its weakest link. What should a company do to properly gauge the strength of its links and continually​ improve?

-Perform a​ growth-share matrix. -Determine the​ company's proper marketing mix. -Evaluate its value delivery network. -Perform a SWOT analysis. (Examine the​ company's partner relationship management.)

A wedding services company changes its marketing strategy to reflect the fact that more LGBT​ (lesbian/gay/bisexual/transgender) marriages are taking place. The company is offering a broader range of ceremonies that cater to this market. Which of the following environments must this wedding company​ analyze?

-Political (Cultural) -Technological -Natural -Economic

Wonders such as robotic​ surgery, miniaturized​ electronics, and antibiotics can be attributed to which marketing​ environment?

-Political -Cultural -Natural (Technological) -Social

A marketing dashboard is used to do which of the​ following?

-Promote a product to a target group. -Determine the financial cost of developing a product. (Monitor strategic marketing performance.) -Analyze the new product lines being developed. -Develop a course of action to market a product.

How does the microenvironment of a company differ from its​ macroenvironment?

-The microenvironment affects a larger portion of the company than the macroenvironment. (The microenvironment deals with the​ company, suppliers, marketing​ intermediaries, customer​ markets, competitors, and publics.) -The microenvironment is​ company-based, whereas the macroenvironment is​ customer-based. -The microenvironment deals with the big​ problem, whereas the macroenvironment deals with trivial problems. -The microenvironment uses more financial resources than the macroenvironment.

A value chain consists of which of the​ following?

-The network of distributors and suppliers that support a company -The acquisitions team that buys products for the company to sell -A chain of SBUs within a company that provide the most value (The series of internal departments that carry out​ value-creating activities) -The customers who assign value to products within the company

From a marketing​ standpoint, which of the following BEST describes Baby​ Boomers?

-They tend to research products before they consider a purchase. (They constitute a lucrative market for financial​ services, new housing and home​ remodeling, new​ cars, travel and​ entertainment, eating​ out, and health and fitness products.) -They are slowing down as they age. -They are more likely to be receptive to irreverent ad pitches that make fun of convention and tradition. -They blend the online and offline worlds seamlessly as they socialize and shop.

What is the purpose of the marketing mix as part of the overall marketing​ strategy?

-To create an overall positive image in the​ customer's mind that is favorably associated with the company (To elicit a response that influences a demand for the product from the customers the company is targeting) -To compare some or all of the​ company's products with the products of the​ company's competitors -To maximize the​ company's profits through successful marketing and sales of a particular product -To streamline a​ company's research,​ marketing, production, and sales of a particular product

Why is it important for a company to collect both primary and secondary data when conducting marketing​ research?

-To guarantee the product being researched will be successful -To keep costs down -To avoid complaints that the study is not reliable (To have a​ "full picture" of the subject of its study) -To ensure the data is usable

The Fair Packaging and Labeling Act in the United States enforces laws for what​ reason?

-To protect the public from the unethical actions of big business -To protect the environment from over pollution by companies -To control trade policies and regulations (To protect consumers from fraudulent packaging and labeling) -To protect the interests of society against unrestrained business behavior

An international company has appointed a CPO to ensure the privacy and confidentiality of the consumer data it collects. Which of the following is the CPO MOST likely to do as a function of his​ job?

-Track the clicks of customers on websites. -Scour consumer financial information. -Use customer data in such a way to convince customers to buy products. -Compile an exhaustive resource of customer data. (Inform customers of the​ company's privacy policy.)

You and seven other people relay your feelings and thoughts about a potential new product to a trained moderator. In​ exchange, you receive a small payment. You are participating in​ a(n) ________.

-experiment -individual interview -ethnographic study (focus group interview) -immersion group

The group of economic factors that affect​ consumers' purchasing power and spending patterns is called​ ________.

-income distribution -macroenvironment -the value market (the economic environment) -demographic information

To create value for​ customers, marketers must improve the performance of the​ ______, which includes partnering with​ suppliers, distributors, and customers.

-internal value chain (value delivery network) -marketing system -strategic plan -competitive delivery network

To develop needed​ information, marketing information systems utilize​ _________.

-internal​ databases, big​ data, and market research -marketing​ managers, information​ users, and internal databases -marketing​ intelligence, marketing​ research, and the marketing environment (internal​ databases, marketing​ intelligence, and marketing research) -internal​ databases, marketing​ research, and marketing managers

The role of a​ company's marketing information system​ (MIS) is important because​ ______________.

-it allows a company to outperform its competitors in the marketplace -it maintains the​ company's internal database of customers -it increases the likelihood that a customer will buy a product (it enables a company to use customer insights to improve relationships with customers) -it ensures that the company will have good customer service

Many companies build extensive electronic collections of consumer and market information obtained from data sources within the​ company's network. This is known as​ ___________.

-marketing research (an internal database) -an intranet -online marketing research -marketing intelligence

Competitive marketing intelligence uses​ _________ data sources.

-private (publicly available) -expensive -​competitor's internal -internal

Any contact between a customer and a company is called​ a(n) _________.

-purchase -service call -sales call (touch point) -satisfaction survey

The purpose of business legislation is primarily based on​ ________.

-rehabilitation -education -guidance (protection) -punishment

When consumers respond in a similar way to a given set of marketing​ efforts, they can be referred to as​ a(n) _________.

-target market (market segment) -differentiation -value chain -market

Competitive marketing intelligence is primarily responsible for​ _____________.

-using primary data over secondary -developing the research plan -implementing the research plan -defining the problem (the systematic collection and analysis of publicly available information)

Major U.S. Legislation Affecting Marketing

Business legislation has been enacted for a number of reasons. The first is to protect companies from each other. The second purpose of government regulation is to protect consumers from unfair business practices. The third purpose is to protect the interests of society against unrestrained business behavior

3-5 Summary

Companies can passively accept the marketing environment as an uncontrollable element to which they must adapt, avoiding threats and taking advantage of opportunities as they arise. Or they can take a proactive stance, working to change the environment rather than simply reacting to it. Whenever possible, companies should try to be proactive rather than reactive.

Marketing Research

Companies use marketing research in a wide variety of situations. For example, marketing research gives marketers insights into customer motivations, purchase behavior, and satisfaction. It can help them to assess market potential and market share or measure the effectiveness of pricing, product, distribution, and promotion activities.

Customers

Consumer markets consist of individuals and households that buy goods and services for personal consumption. Business markets buy goods and services for further processing or use in their production process. Reseller markets buy goods and services to resell at a profit. Government markets consist of government agencies that buy goods and services to produce public services. International markets consist of buyers in other countries, including consumers, producers, resellers, and governments.

2-4 Summary

Customer engagement, value, and relationships are at the center of marketing strategy and programs. Through market segmentation, targeting, differentiation, and positioning, the company divides the total market into smaller segments, selects segments it can best serve, and decides how it wants to bring value to target consumers in the selected segments. It then designs an integrated marketing mix to produce the response it wants in the target market. The marketing mix consists of product, price, place, and promotion decisions (the four Ps).

Customer Relationship Management (CRM)

Customer relationship management (CRM) is used to manage detailed information about individual customers and carefully manage customer touch points to maximize customer loyalty. CRM consists of sophisticated software and analysis tools from companies such as Salesforce.com, Oracle, Microsoft, and SAS that integrate customer information from all sources, analyze it in depth, and apply the results to build stronger customer relationships. By using CRM to understand customers better, companies can provide higher levels of customer service and develop deeper customer relationships. CRM provides a 360-degree view of the customer relationship. Firms can use CRM to pinpoint high-value customers, target them more effectively, cross-sell the company's products, and create offers tailored to specific customer requirements. Netflix tracks and parses member data on tens of millions of searches, ratings, and "plays." The company's bulging database contains every viewing detail for each individual subscriber—real-time data on what shows they watch, at what times, on what devices, at what locations, even when they hit the pause, rewind, or fast-forward buttons during programs. Such analytics employ artificial intelligence (AI), technology by which machines think and learn in a way that looks and feels human but with a lot more analytical capacity. Using this rich base of big data, Netflix builds detailed individual subscriber profiles and then uses these profiles to tailor each customer's viewing experience and make personalized recommendations.

Demographic Environment

Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Marketers analyze several important factors that affect the marketing environment. The first factor is the changing age and family structures. The U.S. population contains several generational groups. These include the Baby Boomers, Generation X, Generation Y or Millennials, and Generation Z. These are discussed in more detail on the next slide. The second factor is the changing American household. More people are divorcing or separating, choosing not to marry, marrying later, or marrying without intending to have children. Marketers must increasingly consider the special needs of nontraditional households because they are now growing more rapidly than traditional households. Each group has distinctive needs and buying habits. The third factor is geographic shifts in population. Population shifts interest marketers because people in different regions buy differently. For example, people in the Midwest buy more winter clothing than people in the Southeast. And the final factor is increasing diversity. Marketers face increasingly diverse markets as their operations become more international in scope. Some major companies also explicitly target gay and lesbian consumers. The U.S. population contains several generational groups. These include the Baby Boomers, Generation X, Generation Y or Millennials, and Generation Z. Baby boomers: The 78 million people born during the years following World War II and lasting until 1964. Generation X: The 49 million people born between 1965 and 1976 in the "birth dearth" following the baby boom. Millennials (or Generation Y): The 83 million children of the baby boomers born between 1977 and 2000. Generation Z: People born after 2000 (although many analysts include people born after 1995) who make up the kids, tweens, and teens markets With so much potential, many brands and organizations focus on Gen Xers as a prime target segment. For example, a full 82 percent of Gen Xers own their own homes, making them an important segment for home-and-hearth marketers. Home-improvement retailer Lowe's markets heavily to Gen X homeowners, urging them to "Never Stop Improving." Through ads, online videos, and a substantial social media presence, Lowe's provides ideas and advice on a wide range of indoor and outdoor home-improvement projects and problems, providing solutions that make life simpler for busy Gen X homeowners and their families.

3-2 Summary

Demography is the study of the characteristics of human populations. Today's demographic environment shows a changing age structure, shifting family profiles, geographic population shifts, a better-educated and more white-collar population, and increasing diversity. The economic environment consists of factors that affect buying power and patterns. The economic environment is characterized by more frugal consumers who are seeking greater value—the right combination of good quality and service at a fair price. The distribution of income also is shifting. The rich have grown richer, the middle class has shrunk, and the poor have remained poor, leading to a two-tiered market.

Intrusions on Consumer Privacy

Even though many customers feel positive about marketing research and believe that it serves a useful purpose, there are others who strongly resent or even mistrust marketing research. Failure to address privacy issues could result in angry, less cooperative consumers and increased government intervention. As a result, the marketing research industry is considering several options for responding to intrusion and privacy issues. One example is the Marketing Research Association's "Your Opinion Counts" and "Respondent Bill of Rights" initiatives to educate consumers about the benefits of marketing research and distinguish research from telephone selling and database building. Most major companies have now appointed a chief privacy officer (CPO), whose job is to safeguard the privacy of consumers who do business with the company. If researchers provide value in exchange for information, customers will provide it. For example, Amazon.com customers do not mind if the firm builds a database of products they buy as a way to provide future product recommendations. The best approach is for researchers to ask only for the information they need, use it responsibly to provide customer value, and avoid sharing information without the customer's permission. By studying the buying histories of women who'd previously signed up for its baby registries, Target found that it could develop a "pregnancy prediction" score for each customer based on her purchasing patterns across 25 product categories. It used this score to start sending personalized books of coupons for baby-related items to expectant parents, keyed to their pregnancy stages. However, the strategy hit a snag when an angry man showed up at his local Target store, complaining that his high school-aged daughter was receiving Target coupons for cribs, strollers, and maternity clothes. "Are you trying to encourage her to get pregnant?" he demanded. The Target store manager apologized. But when he called to apologize again a few days later, he learned that Target's marketers had, in fact, known about the young woman's pregnancy before her father did.

Marketing Information

Most marketing managers are overloaded with data and often overwhelmed by it. Marketers don't need more information; they need better information. And they need to make better use of the information they already have. The real value of marketing research and marketing information lies in how it is used—in the customer insights that it provides.

Research Instruments

In collecting primary data, marketing researchers have a choice of two main research instruments: questionnaires and mechanical instruments. A questionnaire is by far the most common instrument used for research. Closed-ended questions include all the possible answers, and subjects make choices among them. Open-ended questions allow respondents to answer in their own words. Open-ended questions are especially useful in exploratory research, when the researcher is trying to find out what people think but is not measuring how many people think in a certain way. Closed-ended questions, on the other hand, provide answers that are easier to interpret and tabulate. Researchers should use care in the wording and ordering of questions. Mechanical instruments are used to monitor consumer behavior. For example, Time Warner's MediaLab uses high-tech observation to capture the changing ways that today's viewers are using and reacting to television and Web content. Some researchers are applying neuromarketing, which involves measuring brain activity to learn how consumers feel and respond. For example, PepsiCo's Frito-Lay worked with Nielsen's NeuroFocus to assess consumer motivations underlying the success of its Cheetos snack brand. In collecting primary data, marketing researchers have a choice of two main research instruments: questionnaires and mechanical instruments. A questionnaire is by far the most common instrument used for research. Closed-ended questions include all the possible answers, and subjects make choices among them. Open-ended questions allow respondents to answer in their own words. Open-ended questions are especially useful in exploratory research, when the researcher is trying to find out what people think but is not measuring how many people think in a certain way. Closed-ended questions, on the other hand, provide answers that are easier to interpret and tabulate. Researchers should use care in the wording and ordering of questions. Mechanical instruments are used to monitor consumer behavior. For example, Time Warner's MediaLab uses high-tech observation to capture the changing ways that today's viewers are using and reacting to television and Web content. Some researchers are applying neuromarketing, which involves measuring brain activity to learn how consumers feel and respond. Neuromarketing helped improve the effectiveness of ads for the Shelter Pet Project, increasing viewer attention, emotional engagement, and memory recall and more than doubling traffic to the organization's website.

The Company

In designing marketing plans, marketing management takes other company groups into account—groups such as top management, finance, research and development (R&D), purchasing, operations, human resources, and accounting. All of these interrelated groups form the internal environment. With marketing taking the lead, all departments—from manufacturing and finance to legal and human resources—share the responsibility for understanding customer needs and creating customer value.

Online Marketing Research

Increasingly, researchers are collecting primary data through online marketing research. The Internet is especially well suited to quantitative research. Advantages of Internet-based surveys are speed and low costs. Researchers can quickly and easily distribute surveys to thousands of respondents and responses can be almost instantaneous. Internet-based surveys also tend to be more interactive and engaging, easier to complete, and less intrusive. A primary qualitative Internet-based research approach is online focus groups. For example, FocusVision's InterVu service lets focus group participants at remote locations see, hear, and react to each other in real-time, face-to-face discussions. Both quantitative and qualitative Internet-based research have some drawbacks. One major problem is controlling who's in the online sample. To overcome such sample and context problems, many online research firms use opt-in communities and respondent panels. Alternatively, many companies are now developing their own custom social networks and using them to gain customer inputs and insights.

4-4 Summary

Information gathered in internal databases and through marketing intelligence and marketing research usually requires more analysis. To analyze individual customer data, many companies have now acquired or developed special software and analysis techniques—called customer relationship management (CRM)—that integrate, analyze, and apply mountains of individual customer data to gain a 360-degree view of customers and build stronger customer relationships. They apply marketing analytics to dig out meaningful patterns in big data, gain customer insights, and gauge marketing performance. Marketing information has no value until it is used to make better marketing decisions. Thus, the MIS must make the information available to managers and others who make marketing decisions or deal with customers. In some cases, this means providing regular reports and updates; in other cases, it means making non-routine information available for special situations and on-the-spot decisions. Many firms use company intranets and extranets to facilitate this process. Thanks to modern technology, today's marketing managers can gain direct access to marketing information at any time and from virtually any location.

International Marketing Research

International researchers follow the same steps as domestic researchers, from defining the research problem and developing a research plan to interpreting and reporting the results. However, they often face more and different problems. In many foreign markets, the international researcher may have a difficult time finding good secondary data. Because of the scarcity of good secondary data, international researchers must collect their own primary data, and reaching respondents is not always easy in other parts of the world. Cultural differences from country to country cause additional problems for international researchers. Language is the most obvious obstacle. Consumers in different countries also vary in their attitudes toward marketing research. Customs in some countries may prohibit people from talking with strangers. Although the costs and problems associated with international research may be high, the costs of not doing it might be even higher. Once recognized, many of the problems associated with international marketing research can be overcome or avoided.

Marketing Research in Small Businesses and Nonprofit Organizations

Just like larger firms, small organizations need market information and the customer insights that it can provide. Many marketing research techniques can be used by smaller organizations in a less formal manner and at little or no expense. Small businesses and not-for-profit organizations can obtain good marketing insights through observation or informal surveys using small convenience samples. They can collect a considerable amount of information at very little cost online. They can scour competitor and customer Web sites and use Internet search engines to research specific companies and issues. Although these informal research methods are less complex and less costly, they still must be conducted with care. Managers must think carefully about the objectives of the research, formulate questions in advance, recognize the biases introduced by smaller samples and less skilled researchers, and conduct the research systematically.

Primary Data

Landor researchers also shop with the families at their local supermarkets and look over their shoulders while they shop online. The families furnish monthly online reports detailing their shopping behaviors and opinions. The Landor Families study provides rich behavioral insights for Landor clients such as Danone, Kraft Foods, and Procter & Gamble.

Mail, Telephone, and Personal Interviewing

Mail questionnaires can be used to collect large amounts of information at a low cost per respondent. Respondents may give more honest answers to more personal questions on a mail questionnaire than to an unknown interviewer. However, mail questionnaires are not very flexible. Telephone interviewing is one of the best methods for gathering information quickly, and it provides greater flexibility than mail questionnaires. Interviewers can explain difficult questions and, depending on the answers they receive, skip some questions or probe on others. However, the method introduces interviewer bias, which is the way interviewers talk, how they ask questions, and other differences that may affect respondents' answers. Personal interviewing takes two forms: individual interviewing and group interviewing. Individual interviewing involves talking with people in their homes or offices, on the street, or in shopping malls. Such interviewing is flexible. Group interviewing consists of inviting 6 to 10 people to meet with a trained moderator to talk about a product, service, or organization. Group interviewing is also referred to as focus group interviewing. Some companies use immersion groups, which are small groups of consumers who interact directly and informally with product designers without a focus group moderator present. For example, The Mom Complex uses "Mom Immersion Sessions" to help brand marketers understand and connect directly with their "mom customers" on important brand issues.

Customer Insights

Many companies are now restructuring their marketing research and information functions. They are creating customer insights teams which collect customer and market information from a wide variety of sources, ranging from traditional marketing research studies to mingling with and observing consumers to monitoring consumer online conversations about the company and its products. This information is then used to develop important customer insights from which the company can create more value for its customers. Consumer insights: PepsiCo's "consumer insights teams" wring actionable insights out of the glut of marketing data. They have even developed a consumer insights app to share custom designed content with brand decision makers. Beyond just transmitting data and findings through traditional fact based presentations, reports, and spreadsheets, the Consumer Insights teams share their insights in more engaging, accessible, and digestible ways.

Responding to the Marketing Environment

Many companies view the marketing environment as an uncontrollable element to which they must react and adapt. They passively accept the marketing environment and do not try to change it. Other companies take a proactive stance toward the marketing environment. Rather than assuming that strategic options are bounded by the current environment, these firms develop strategies to change the environment. These firms take aggressive actions to affect the publics and forces in their marketing environment. Marketing management cannot always control environmental forces. In many cases, it must settle for simply watching and reacting to the environment. For example, a company would have little success trying to influence geographic population shifts, the economic environment, or major cultural values. But whenever possible, smart marketing managers take a proactive rather than reactive approach to the marketing environment.

Marketing Environment

Marketing environment refers to the actors and forces outside marketing that affect marketing management's ability to build and maintain successful relationships with target customers. The marketing environment consists of a microenvironment and a macroenvironment. The microenvironment consists of the actors close to the company that affect its ability to serve its customers. The macroenvironment consists of the larger societal forces that affect the microenvironment.

Defining the Problem and Research Objectives

Marketing managers and researchers must work together closely to define the problem and agree on research objectives. The manager best understands the decision for which information is needed, whereas the researcher best understands marketing research and how to obtain the information. Defining the problem and research objectives is often the hardest step in the research process. After the problem has been defined carefully, the manager and the researcher must set the research objectives. Managers often start with exploratory research and later follow with descriptive or causal research. The statement of the problem and research objectives guides the entire research process. The manager and the researcher should put the statement in writing to be certain that they agree on the purpose and expected results of the research.

Sampling Plan

Marketing researchers usually draw conclusions about large groups of consumers by studying a small sample of the total consumer population. The sample should be representative of the population so that the researcher can make accurate estimates. Designing the sample requires three decisions. First, who is to be studied (unit)? Second, how many people should be included (size)? Finally, how should the people in the sample be chosen (procedure)?

Technological Environment

New technologies can offer exciting opportunities for marketers. Many firms use radio-frequency identification, or RFID, technology to track products through various points in the distribution channel. New technologies create new markets and opportunities. Companies that do not keep up will soon find their products outdated. Government agencies investigate and ban potentially unsafe products. Regulations have resulted in much higher research costs and longer times between new product ideas and their introduction. Marketers should be aware of these regulations when applying new technologies and developing new products. Wearing a MagicBand at The Walt Disney World Resort opens up a whole new level of Disney's famed magic. After registering for cloud-based MyMagic+ services, with the flick of your wrist you can enter a park or attraction, buy dinner or souvenirs, or even unlock your hotel room.

Research Approaches

Observational and ethnographic research yield the kinds of details that don't emerge from traditional research questionnaires or focus groups. For instance, Fisher-Price has established an observation lab in which it can observe the reactions children have to new toys. A wide range of companies now use ethnographic research. For example, Coors insights teams frequent bars and other locations in a top-secret, small-town location—they call it the "Outpost"—within a day's drive of Chicago. The researchers use the town as a real-life lab. Survey research is the approach best suited for gathering descriptive information. The major advantage of survey research is its flexibility. Surveys addressing almost any marketing question or decision can be conducted by phone or mail, in person, or online. The disadvantages of survey research are that people may be unwilling to respond to unknown interviewers or answer questions about topics they consider private. Whereas observation is best suited for exploratory research and surveys for descriptive research, experimental research is best suited for gathering causal information. Experimental research tries to explain cause-and-effect relationships. For example, before adding a new sandwich to its menu, McDonald's might use experiments to test the effects on sales of two different prices it might charge.

Research Plan

Once researchers have defined the research problem and objectives, they must determine the exact information needed, develop a plan for gathering information efficiently, and present the plan to management. Research objectives must be translated into specific information needs. For example, suppose that Chipotle Mexican Grill wants to know how consumers would react to the addition of drive-thru service to its restaurants. The proposed research might call for the following specific information: •Demographic, economic, and lifestyle characteristics of current Chipotle customers •Characteristics and usage patterns of the broader population of fast-food and fast-casual diners •Impact on the Chipotle customer experience •Chipotle employee reactions to drive-thru service •Forecasts of both inside and drive-thru sales and profits The research plan should be presented in a written proposal. A written proposal is important when the research project is large and complex or when an outside firm carries it out. The proposal should cover the management problems addressed, the research objectives, the information to be obtained, and how the results will help management's decision making. The proposal should also include estimated research costs. To meet the manager's information needs, the research plan can call for gathering secondary data, primary data, or both.

Misuse of Research Findings

Research studies can be powerful persuasion tools. But in some cases, research surveys appear to have been designed just to produce the intended effect. Few advertisers openly rig their research designs or blatantly misrepresent the findings. Most abuses are subtle stretches so as to avoid disputes over the validity and use of research findings. Recognizing that surveys can be abused, several associations—including the American Marketing Association, the Marketing Research Association, and the Council of American Survey Research Organizations (CASRO)—have developed codes of research ethics and standards of conduct. For example, the CASRO Code of Standards and Ethics for Survey Research outlines researcher responsibilities to respondents, including confidentiality, privacy, and avoidance of harassment. Each company must accept responsibility for policing the conduct and reporting of its own marketing research to protect consumers' best interests and its own.

Secondary Data

Researchers usually start by gathering secondary data. The company's internal database provides a good starting point. Companies can buy secondary data from outside firms that supply high-quality data to suit a wide variety of marketing information needs. The company can also utilize the wide assortment of external information sources. Using commercial online databases, marketing researchers can conduct their own searches of secondary data sources. Internet search engines can also help in locating relevant secondary information sources. However, they can also be very frustrating and inefficient. Secondary data can usually be obtained more quickly and at a lower cost than primary data. Also, secondary sources can sometimes provide data an individual company cannot collect on its own, like data that is not available directly or would be too expensive to collect. For example, it would be too expensive for Red Bull's marketers to conduct a continuing retail store audit to find out about the market shares, prices, and displays of competitors' brands. However, secondary data can also present problems. Researchers can rarely obtain all the data they need from secondary sources. For example, Chipotle will not find existing information regarding consumer reactions about new drive-thru service that it has not yet installed. Even when data can be found, the information might not be very usable. The researcher must evaluate secondary information carefully to make certain it is relevant, accurate, up-to-date, and impartial.

Marketing Intermediaries

Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers. Physical distribution firms help the company stock and move goods from their points of origin to their destinations. Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets. Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods. Coca-Cola provides its retail partners with much more than just soft drinks. It also pledges powerful marketing support.

Socially Responsible Behavior

Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. Almost every aspect of marketing involves ethics and social responsibility issues. Companies are now developing policies, guidelines, and other responses to complex social responsibility issues. Enlightened companies encourage their managers to look beyond what the regulatory system allows and simply "do the right thing."

Developing Strategies for Growth

Starbucks has become America's—the world's—largest coffeehouse by skillfully engaging customers and delivering superior customer value. At its core, Starbucks doesn't sell just coffee. It sells "The Starbucks Experience." Starbucks story emphasizes: Good marketing strategy means keeping your eye squarely on delivering customer value. The objective isn't just growth or sales or profits; it's engaging customers in a meaningful way and creating value for them.

Suppliers

Suppliers form an important link in the company's overall customer value delivery network. They provide the resources needed by the company to produce its goods and services. Supplier problems can seriously affect marketing. Marketing managers must watch supply availability and costs. Supply shortages or delays can cost sales in the short run and damage customer satisfaction in the long run. Rising supply costs may force price increases that can harm the company's sales volume. IKEA's mission is to create a better everyday life for customers by offering trendy but simple and practical home furnishings at prices so low that as many people as possible can afford them. But before it can sell the billions of dollars' worth of products its customers covet, IKEA must first develop a robust and reliable network of supplier-partners who can help it design and make all those products.

4-2 Summary

The marketing information system (MIS) consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights. A well-designed information system begins and ends with users. The MIS first assesses information needs. The MIS primarily serves the company's marketing and other managers, but it may also provide information to external partners. Then, the MIS develops information from internal databases, marketing intelligence activities, and marketing research. Internal databases provide information on the company's own operations and departments. Such data can be obtained quickly and cheaply but often need to be adapted for marketing decisions. Marketing intelligence activities supply everyday information about developments in the external marketing environment, including listening and responding to the vast and complex digital environment. Market research consists of collecting information relevant to a specific marketing problem faced by the company. Finally, the marketing information system helps users analyze and use the information to develop customer insights, make marketing decisions, and manage customer relationships.

3-1 Summary

The company's microenvironment consists of actors close to the company that combine to form its value delivery network or that affect its ability to serve customers. It includes the company's internal environment—its several departments and management levels—as it influences marketing decision making. Marketing channel firms—suppliers, marketing intermediaries, physical distribution firms, marketing services agencies, and financial intermediaries—cooperate to create customer value. Competitors vie with the company in an effort to serve customers better. Various publics have an actual or potential interest in or impact on the company's ability to meet its objectives. Finally, five types of customer markets exist: consumer, business, reseller, government, and international markets. The macroenvironment consists of larger societal forces that affect the entire microenvironment. The six forces making up the company's macroenvironment are demographic, economic, natural, technological, political/social, and cultural forces. These forces shape opportunities and pose threats to the company.

Cultural Environment

The cultural environment consists of institutions and other forces that affect a society's basic values, perceptions, preferences, and behaviors. Society shapes basic beliefs and values. People grow up in a particular society that shapes their basic beliefs and values. They absorb a worldview that defines their relationships with others. Cultural characteristics can affect marketing decision making. People in a given society hold many beliefs and values. Their core beliefs and values have a high degree of persistence and are passed on from parents to children and are reinforced by schools, churches, businesses, and government. For example, most Americans believe in individual freedom, hard work, getting married, achievement, and success. These beliefs shape more specific attitudes and behaviors found in everyday life. Secondary beliefs and values are more open to change and include people's views of themselves, others, organizations, society, nature, and the universe. Believing in marriage is a core belief; believing that people should get married early in life is a secondary belief. Marketers have some chance of changing secondary values but little chance of changing core values. Cultural characteristics that can affect marketing decision making are the persistence of cultural values and shifts in secondary cultural values, such as people's views of themselves, others, organizations, society, and nature. People's views of themselves: People vary in their emphasis on serving themselves versus serving others. People's views of others: More "cocooning" - staying home, eating home-cooked meals People's views of organizations: Decline of loyalty toward companies People's views of society: Patriots defend it, reformers want to change it, and malcontents want to leave it. People's views of nature: Some feel ruled by it, in harmony with it, or seek to master it. People's views of the universe: Renewed interest in spirituality and development of more permanent values—family, community, earth, faith Annie's is out to create a happier and healthier world with nourishing foods and responsible conduct that is "forever kind to the planet." Annie's products are made from simple, natural ingredients grown by its farm partners. The products contain "no artificial anything," says the company. "If it's not real, it's not Annie's." The company works closely with its food-supply-system partners to jointly raise the bar for sustainability and organics. Annie's also makes sustainable practices a top priority with its packaging—more than 90 percent of Annie's packaging by weight is recyclable.

Types of Samples

The different types of samples fall under two basic categories: probability samples and nonprobability samples. Probability samples include the following. Simple random sample: Every member of the population has a known and equal chance of selection. Stratified random sample: The population is divided into mutually exclusive groups (such as age groups), and random samples are drawn from each group. Cluster (area) sample: The population is divided into mutually exclusive groups (such as blocks), and the researcher draws a sample of the groups to interview. Nonprobability samples include the following. Convenience sample: The researcher selects the easiest population members from which to obtain information. Judgment sample: The researcher uses his or her judgment to select population members who are good prospects for accurate information. Quota sample: The researcher finds and interviews a prescribed number of people in each of several categories. When probability sampling costs too much or takes too much time, marketing researchers take nonprobability samples, even though their sampling error cannot be measured. The best method to use depends on the needs of the research project.

Economic Environment

The economic environment consists of economic factors that affect consumer purchasing power and spending patterns. Economic factors can have a dramatic effect on consumer spending and buying behavior. Consumers have now adopted a back-to-basics sensibility in their lifestyles and spending patterns that will likely persist for years to come. They are buying less and looking for greater value in the things they do buy. In turn, value marketing has become the watchword for many marketers. Marketers in all industries are looking for ways to offer today's frugal buyers greater value. Marketers should pay attention to income distribution as well as income levels. Over the past several decades, the rich have grown richer, the middle class has shrunk, and the poor have remained poor. This distribution of income has created a tiered market. Many companies aggressively target the affluent, while other firms target those with more modest means. Still other companies tailor their marketing offers across a range of markets, from the affluent to the less affluent.

4-3 Summary

The first step in the marketing research process involves defining the problem and setting the research objectives, which may be exploratory, descriptive, or causal research. The second step consists of developing a research plan for collecting data from primary and secondary sources. The third step calls for implementing the marketing research plan by gathering, processing, and analyzing the information. The fourth step consists of interpreting and reporting the findings. Additional information analysis helps marketing managers apply the information and provides them with sophisticated statistical procedures and models from which to develop more rigorous findings. Both internal and external secondary data sources often provide information more quickly and at a lower cost than primary data sources, and they can sometimes yield information that a company cannot collect by itself. However, needed information might not exist in secondary sources. Researchers must also evaluate secondary information to ensure that it is relevant, accurate, current, and impartial. Primary research must also be evaluated for these features. Each primary data collection method—observational, survey, and experimental—has its own advantages and disadvantages. Similarly, each of the various research contact methods—mail, telephone, personal interview, and online—has its own advantages and drawbacks.

Competitive Marketing Intelligence

The goal of competitive marketing intelligence is to improve strategic decision making by understanding the consumer environment, assessing and tracking competitors' actions, and providing early warnings of opportunities and threats. Good marketing intelligence can help marketers gain insights into how consumers talk about and engage with their brands. Many companies send out teams of trained observers to mix and mingle personally with customers as they use and talk about the company's products. Other companies, like MasterCard, have set up sophisticated digital command centers that routinely monitor brand-related online consumer and marketplace activity. Companies can monitor competitors' Web sites and use the Internet to search specific competitor names, events, or trends and see what turns up. Tracking consumer conversations about competing brands is often as revealing as tracking conversations about the company's own brands. Companies can obtain important intelligence information from suppliers, resellers, and key customers. Intelligence seekers can pour through any of the thousands of online databases. For example, the U.S. Security and Exchange Commission's database provides a huge stockpile of financial information on public competitors, and the U.S. Patent Office and Trademark database reveals patents that competitors have filed. Some intelligence gathering techniques may involve questionable ethics. With all the legitimate intelligence sources now available, a company does not need to break the law or accepted codes of ethics to get good intelligence.

Interpreting and Reporting Findings

The market researcher must interpret the findings, draw conclusions, and report them to management. The researcher should present important findings and insights that are useful in the major decisions faced by management. The best research means little if the manager blindly accepts faulty interpretations from the researcher. In many cases, findings can be interpreted in different ways, and discussions between researchers and managers will help point to the best interpretations. Thus, managers and researchers must work together closely when interpreting research results, and both must share responsibility for the research process and resulting decisions.

Competitors

The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Thus, marketers must do more than simply adapt to the needs of target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors' offerings in the minds of consumers. No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared with those of its competitors. Large firms with dominant positions in an industry can use certain strategies that smaller firms cannot afford. However, small firms can also develop winning strategies.

Distributing and Using Marketing Information

The marketing information system must make information readily available to managers and others who need it, when they need it. In some cases, this means providing managers with routine information such as performance reports, intelligence updates, and reports on the results of research studies. But, marketing managers also require non-routine information to make on-the-spot decisions. For example, a sales manager having trouble with a large customer may want a summary of the account's sales and profitability over the past year. Many firms use company intranet and internal CRM systems to facilitate the distribution and use of marketing information. Companies are also increasingly allowing key customers and value-network members to access account, product, and other data on demand through extranets.

4-1 Summary

The marketing process starts with a complete understanding of the marketplace and consumer needs and wants. Thus, the company needs to turn sound consumer information into meaningful customer insights by which it can produce superior value for its customers. The company also requires information on competitors, resellers, and other actors and forces in the marketplace. Increasingly, marketers are viewing information not only as an input for making better decisions but also as an important strategic asset and marketing tool.

Natural Environment

The natural environment involves the physical environment and the natural resources that are needed as inputs by marketers or that are affected by marketing activities. Marketers should be aware of several trends in the natural environment. The first involves growing shortages of raw materials. Firms making products that require scarce resources face large cost increases, even if the materials remain available. The second trend is increased pollution. The third trend is increased government intervention in natural resource management. The governments of different countries vary in their concern and efforts to promote a clean environment. Today, enlightened companies adopt practices that support environmental sustainability. This refers to the effort to create a world economy that the planet can support indefinitely.

3-3 Summary

The natural environment shows three major trends: shortages of certain raw materials, higher pollution levels, and more government intervention in natural resource management. Environmental concerns create marketing opportunities for alert companies. The technological environment creates both opportunities and challenges. Companies that fail to keep up with technological change will miss out on new product and marketing opportunities.

3-4 Summary

The political environment consists of laws, agencies, and groups that influence or limit marketing actions. The political environment has undergone changes that affect marketing worldwide: increasing legislation regulating business, strong government agency enforcement, and greater emphasis on ethics and socially responsible actions. The cultural environment consists of institutions and forces that affect a society's values, perceptions, preferences, and behaviors. The environment shows trends toward new technology enabled communication, a lessening trust of institutions, increasing patriotism, greater appreciation for nature, a changing spiritualism, and the search for more meaningful and enduring values.

Political Environment

The political environment refers to laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

Implementing the Research Plan

The researcher next puts the marketing research plan into action. This involves collecting, processing, and analyzing the information. Data collection can be carried out by the company's marketing research staff or outside firms. Researchers make sure that the plan is implemented correctly and must guard against problems with data collection techniques and technologies, data quality, and timeliness. Researchers must also process and analyze the collected data to isolate important information and insights. They need to check data for accuracy and completeness and code it for analysis. The researchers then tabulate the results and compute statistical measures.

Figure 4.1 The Marketing Information System

This figure shows that the MIS begins and ends with information users. The information users are marketing managers, internal and external partners, and others who need marketing information. Marketers start by assessing user information needs. Next, they develop needed information using internal company databases, marketing intelligence activities, and marketing research. Finally, the MIS helps users to analyze and use the information to develop customer insights, make marketing decisions, and manage customer engagement and relationships.

Figure 3.1 Actors in the Microenvironment

This figure shows the major actors in the marketer's microenvironment. Each of these actors are discussed in greater detail in the following slides.

Cause-Related Marketing

To exercise their social responsibility and build more positive images, many companies are now linking themselves to worthwhile causes. Cause-related marketing has become a primary form of corporate giving. Critics worry that cause-related marketing is more a strategy for selling than a strategy for giving. Thus, companies using cause-related marketing might find themselves walking a fine line between increased sales and an improved image and charges of exploitation. Under its three-part mission, Ben & Jerry's wants to make fantastic ice cream (product mission), manage the company for sustainable financial growth (economic mission), and use the company "in innovative ways to make the world a better place" (social mission). Ben & Jerry's backs its mission with actions.

Assessing Marketing Information Needs

Too much information can be as harmful as too little. Some managers will ask for whatever information they can get without thinking carefully about what they really need. Other managers may omit things they ought to know, or they may not know to ask for some types of information they should have. The MIS must monitor the marketing environment to provide decision makers with information they should have to better understand customers and make key marketing decisions. It is important for firms to decide whether the value of the insights gained from the additional information is worth the cost of providing it. However, it is difficult to assess the value and cost.

Internal Databases

USAA provides financial services to U.S. military personnel and their families, largely through direct marketing via the phone, the internet, and mobile channels. It maintains a huge customer database built from customer purchasing histories and information collected directly through customer surveys, transaction data, and browsing behavior at its web and social media sites. USAA uses the database to tailor direct marketing offers to the needs of individual customers. Internal databases usually can be accessed more quickly and cheaply than other information sources, but they also present some problems. Because internal information is often collected for other purposes, it may be incomplete or in the wrong form for making marketing decisions. Data also ages quickly; keeping the database current requires a major effort. Finally, managing and mining the mountains of information that a large company produces requires highly sophisticated equipment and techniques.

The major cultural values of a society are expressed by​ _________.

​(people's views of themselves and​ others, as well as their views of​ organizations, society,​ nature, and the universe) -​people's views of themselves -​people's views of organizations -​people's views of the universe -​people's views of society

Why is marketing return on investment so difficult to​ measure?

​-Customer-centered measures are inconvenient. (There is no consistent definition.) -Marketers do not keep adequate records. -Customer engagement is hard to measure. -Marketing dashboards are inconsistent.

Proactive businesses often take aggressive actions to affect consumers and the forces in their marketing environments. Which of the following does NOT depict a proactive​ company?

​-Sander's Shoes staging a breast cancer walkathon to gain favorable press coverage ​-Richard's Rifles hiring lobbyists to influence gun legislation ​(Sophie's Soups refusing to counter false allegations of rat feces in its soups) -Airway Industries filing a lawsuit to keep its competitor from forming a monopoly ​-Tim's Tobacco creating a blog to help shape public opinion

Big Data and Marketing Analytics

•Marketing analytics consists of the analysis tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights and gauge marketing performance.

​Bob's Bicycle Sales and Repair is a brand new company. From a marketing​ standpoint, what is the FIRST thing​ Bob's Bicycle Sales and Repair needs to​ do?

(Determine who in the community wants or needs a bicycle or repair service.) -Develop a plan to sell as many bicycles as possible. -Develop relationships with the customers who come to purchase bicycles or repair services. -Advertise the company as a location in which to purchase bicycles or repair services. -Develop the best bicycle selection to sell.

What are stars in the growth share​ matrix?

(High-growth, high-share businesses or products) -Low-growth, high-share businesses or products -Low-share, high-growth businesses or products -The growth star matrix does not contain stars. ​-Low-growth, low-share businesses and products

When a company engages in strategic​ planning, it must consider which of the​ following?

(How to take advantage of current business opportunities) -How to best market its products -How to keep current businesses running smoothly -How to divide its assets among stockholders -How to make the most money possible during a fiscal year

A local theatre group wants to increase the membership and attendance at its performances. To do​ so, it hosts free​ shows, offers standup comedy​ nights, and sends volunteers to the local high school. In what is the theatre group​ engaging?

(Market exchange) -Product placement -Market research -Advertising -Societal marketing

​Vince's Video has suffered in the current economy because fewer people have the money for videos and because people utilize available​ technology, including online streaming sites like YouTube and Hulu. The videos​ Vince's Video does sell are often out priced by versions coming from China or​ Taiwan, or they are accused of damaging the environment. Which of the following marketing impacts has not likely affected​ Vince's Video?

(Not-for-profit marketing) -The changing economic environment -The digital age -Sustainable marketability -Rapid globalization

How has the Internet MOST affected companies and​ customers?

(The Internet has allowed consumers to take marketing content and share it.) -The Internet has increased the potential customer base. -The Internet has lowered prices. -The Internet has made advertising easier. -The Internet has made creating an image more important.

What is a business​ portfolio?

(The collection of businesses and products that make up a company) -The record of the responsibilities of the CEO and the CFO -A collection of a group of companies within the same area of business -A projection of a future marketing direction for a company -A record of business investments

What is MOST likely to cause a variation in​ customer-perceived value?

(The​ customer's opinion of what constitutes value) -The cost to produce a product -The popularity of a product to the customer -The​ customer's satisfaction with a product -The cost of advertising to the target market

Advantage Airlines has instituted a loyalty rewards program that rewards customers with free​ Wi-Fi, seat​ upgrades, and free miles for their continued patronage. What relationship tool is Advantage Airlines​ using?

-Club marketing program (Frequency marketing program) -Consumer-generated marketing -Mass-media marketing -Customer-perceived value

​Craig's Craft Beer structures its company in such a way to encourage its most profitable older customers to remain loyal while also targeting a new generation of customers. What is​ Craig's Craft Beer attempting to​ build?

-Customer lifetime value -Customer loyalty -Partner relationships (Customer equity) -Share of customer

You can practice sustainable marketing by adhering to general practices. Which of the following would allow a company to profit by serving immediate needs and​ long-term interests but not necessarily be a practice of sustainable​ marketing?

-Deliver value in a socially and environmentally responsible way. -Help protect the natural environment. -Practice caring capitalism by being civic minded and responsible. (Delay responding to environmental legislation as it is instituted.) -Seek ways to profit by serving the​ long-run interests of customers and communities.

How do market demands relate to needs and​ wants?

-Demands result in customers needing and wanting a particular product. (Needs are satisfied by​ wants, and buying power converts wants into demand.) -Wants and demands are​ equivalent, and both satisfy needs at the same rate. -Needs, wants, and demands all describe the same state in the customer. -Needs and wants outweigh demands in the​ customer's mind.

When a company divides the market into groups of​ customers, it is engaging in which of the​ following?

-Differentiation -Demand management (Market segmentation) -Target marketing -Societal marketing

Question​ marks, cash​ cows, dogs, and stars are the four types of SBUs defined in which of the​ following?

-Product expansion grid -SWOT analysis (​Growth-share matrix) -Market segmentation -Value delivery network

Which of the following scenarios BEST describes the societal marketing​ concept?

-Ethel's Earthware attempts to make its pottery in a way that satisfies customers but is also environmentally friendly and sustainable over the long term. (Tom's Tires constantly tries to improve the tires it sells by placing all its efforts into new design research.) -Alice's Apple Cart regularly asks its customers what kind of apples they want to buy. -Wendy's Wedding Wear frequently promotes itself to customers through​ commercials, fliers, and other forms of advertising. -​Richard's Rotors does everything possible to improve production and lower the cost of its rotors in order to gain customers.

The ultimate goal of the marketing process is to do which of the​ following?

-Evaluate customer needs. -Develop relationships with customers. (Capture value from customers.) -Determine a target market. -Create a quality product.

Which of the following describes the current trend in businesses regarding relationships with​ customers?

-Gather as many customers as possible on a surface level. -Maintain strong relationships with as many customers as possible. (Build the right relationships with the right customers.) -Avoid developing relationships with customers at all. -Find a few customers and develop strong relationships with them.

What is the ultimate aim of customer relationship​ management?

-Produce high customer equity. (Maintain high customer loyalty.) -Establish brand equity. -Increase share of customer. -Produce high customer profitability.

June and Beatrice have started a new​ company, Junbee​ Inc., and are having trouble deciding which marketing path to take to drive sales. June believes they should follow a​ make-and-sell philosophy that focuses on improving their​ product, whereas Beatrice believes they should be more​ customer-oriented and find the right products for their customers. Which of the following BEST describes this​ situation?

-Should Junbee Inc. follow a product or selling​ concept? -Should Junbee Inc. follow a societal marketing or production​ concept? (Should Junbee Inc. follow a product or marketing​ concept?) -Should Junbee Inc. follow a marketing concept or a societal marketing​ concept? -Should Junbee Inc. follow a production or selling​ concept?

How do company objectives and goals relate to the company mission​ statement?

-The mission statement and the company goals are two different pieces used to explain the business of the company to its shareholders. (The goals and objectives outline the steps necessary to accomplish the​ company's mission statement.) -The mission statement is developed based upon the​ company's goals and objectives. -The goals and objectives are a restatement of the mission statement in more understandable terms. -The mission statement defines what the company​ does, and the goals and objectives outline why the company does it.

How does the new concept of marketing differ from the old concept of​ marketing?

-The new concept is more cost efficient. -The new concept requires less work from marketing executives. -The new concept focuses on making money. -The new concept focuses on having a​ well-developed product. (The new concept focuses on the needs of the customer.)

What is the main problem that sellers suffering from marketing myopia​ face?

-They focus more on the​ customer's experience than the product itself. -They focus more on brand image than the quality. -They focus on customer wants instead of demands. (They focus more on products than the​ customer's underlying need.) -They focus more on profit than the​ customer's benefit.

Why is good marketing management​ critical?

-To ensure that the company has a positive image in the eyes of the community -To ensure that products are promoted well enough to encourage a large flow of customers (To ensure that the company serves as many customers as it can and as well as it can) -To ensure that investments are properly spent in order to maximize profits -To ensure that the company is always on the cutting edge of product development

Scott Frost has been coming to​ Adeline's Diner for 20 years and refuses to go anywhere else.​ Ada, the owner of​ Adeline's, loves​ Scott's loyalty but admits he purchases only a cup of cappuccino each visit. Scott would BEST be described as which of the​ following?

-True friend (Barnacle) -Butterfly -Stranger -True believer

A brand new hardware company is writing its mission statement. Which of the following is the BEST mission statement possible for the new​ company?

-We are providers of​ hardware, lumber-based, and appliance products to be used for home improvement and commercial construction projects. -We embrace the deeper meaning of the home and commercial improvements. -We will have two million dollars in profit by the end of our second fiscal year and twice that amount by the end of year five. (We will help customers​ build, invigorate,​ restore, refurbish, or completely redesign their homes or businesses.) -We will be the best hardware company in the world. No other company will ever outsell us.

When is the selling concept typically used by​ marketers?

-When the company focuses on customer needs (For the purchase of unsought goods) -When the company seeks the​ long-term welfare of society -For seasonal items -When the product is of high quality

Setting Company Objectives and Goals

A company needs to turn its mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for reaching them. A broad mission leads to a hierarchy of objectives, including business objectives and marketing objectives. Marketing strategies and programs must be developed to support marketing objectives. For example, the renamed CVS Health, views itself as a "pharmacy innovation company," one that is "helping people on their path to better health." The company's motto: "Health is everything." The renamed CVS Health's motto is "Health is everything." CVS Health's overall mission is to be a "pharmacy innovation company" that "helps people on their way to better health." Its marketing strategies and programs must support this mission. —CVS Caremark Corporation

Markets

A market is the set of actual and potential buyers of a product or service. Sellers must search for buyers, identify their needs, design good market offerings, set prices for them, promote them, store and deliver them. Although marketing was traditionally carried out by sellers, the concept now also includes consumers. Consumers engage in marketing when they search for products, interact with companies to obtain information, and make their purchases. Customer-managed relationships are important as customers are empowered by digital technologies. This has made marketing a two-way affair.

Mission Statement

A mission statement refers to the organization's purpose. What it wants to accomplish in the larger environment. Forging a sound mission begins with the following questions: What is our business? Who is the customer? What do consumers value? What should our business be? Successful companies continuously raise these questions and answer them carefully and completely. Mission statements should be market oriented and defined in terms of satisfying basic customer needs. Mission statements should be meaningful and specific, yet motivating. They should emphasize the company's strengths and tell forcefully how it intends to win in the marketplace. For example, Google's mission is to give people a window into the world's information, wherever it may be found. Finally, a company's mission should focus on customers and the customer experience it seeks to create. For example, Buffalo Wild Wings chain's mission is to provide a total eating and social environment that "fuels the sports fan experience."

Market Differentiation and Positioning

After a company has decided which market segments to enter, it must determine how to differentiate its market offering for each targeted segment and what positions it wants to occupy in those segments. Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Effective positioning begins with differentiation. This refers to actually differentiating the market offering to create superior customer value. Once the company has chosen a desired position, it must take strong steps to deliver and communicate that position to target consumers. The company's entire marketing program should support the chosen positioning strategy. Car sharing service Uber positions itself as "Everyone's private driver." This simple statement provides the backbone for its marketing strategy.

Strategic Planning

Companies must find the game plan for long-run survival and growth that makes the most sense given its specific situation, opportunities, objectives, and resources. This is the focus of strategic planning—the process of developing and maintaining a strategic fit between the organization's goals, capabilities and its changing marketing opportunities. Strategic planning sets the stage for the rest of planning in the firm. Companies prepare annual plans, long-range plans, and strategic plans. The annual and long-range plans deal with the company's current businesses and how to keep them going. In contrast, the strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment.

Downsizing

Companies must not only develop strategies for growing their business portfolios but also strategies for downsizing them. When a firm finds brands or businesses that are unprofitable or that no longer fit its overall strategy, it must carefully prune, harvest, or divest them. There are many reasons that a firm might want to abandon products or markets. The firm may have grown too fast or entered areas where it lacks experience. The market environment might change, making some products or markets less profitable. For example, in difficult economic times, many firms prune out weaker, less-profitable products and markets to focus their more limited resources on the strongest ones. Finally, some products or business units simply age and die.

Figure 2.1 Steps in Strategic Planning

Company-wide strategic planning guides marketing strategy and planning. Like the marketing strategy, the broader company strategy must be customer focused. This figure illustrates the steps in strategic planning. At the corporate level, the company starts the strategic planning process by defining its overall purpose and mission. The mission is turned into detailed supporting objectives that guide the entire company. Then, headquarters decides what portfolio of businesses and products is best for the company and how much support to give each one. In turn, each business and product develops detailed marketing and other departmental plans that support the company-wide plan. Thus, marketing planning occurs at the business-unit, product, and market levels. It supports company strategic planning with more detailed plans for specific marketing opportunities.

Consumer-Generated Marketing

Consumer-generated marketing refers to brand exchanges created by consumers by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers. This might happen through uninvited consumer-to-consumer exchanges in blogs, video-sharing sites, social media, and other digital forums. But increasingly, companies themselves are inviting consumers to play a more active role in shaping products and brand content. For example, for the past nine years, PepsiCo's Doritos brand has held a "Crash the Super Bowl" contest in which it invites 30-second ads from consumers and runs the best ones during the game.

Customer Value and Satisfaction

Consumers face a broad array of products and services that might satisfy a given need. Customers form expectations about the value and satisfaction that various market offerings will deliver. Satisfied customers buy again and tell others about their good experiences. While, dissatisfied customers switch to competitors and criticize the product to others. Marketers should set the right level of expectations. If they set expectations too low, they may satisfy those who buy, but fail to attract enough buyers. If they set expectations too high, buyers will be disappointed. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. We will develop these core concepts in more detail later in the presentation.

Market Offerings

Consumers' needs and wants are fulfilled through market offerings. Market offerings are a combination of products, services, persons, places, organizations, information, ideas, or experiences offered to a market to satisfy a need or a want. For example, the Ad Council and the National Highway Traffic Safety Administration created a "Stop the Texts. Stop the Wrecks" campaign that markets the idea of eliminating texting while driving. The campaign points out that a texting driver is 23 times more likely to get into a crash than a non-texting driver. Marketing myopia refers to sellers paying more attention to the specific products a company offers than to the benefits and experiences produced by these products. They forget that a product is only a tool to solve a consumer problem. These sellers will have trouble if a new product comes along that serves the customer's needs better or less expensively. The customer will have the same need but will want the new product.

Customer Relationship Management

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping, and growing customers. The key to building lasting customer relationships is to create superior customer value and satisfaction. Customer-perceived value is the customer's evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. Importantly, customers often do not judge values and costs accurately or objectively. They act on perceived value. To some consumers, value might mean sensible products at affordable prices. Customer satisfaction is the extent to which a product's perceived performance matches a buyer's expectations. Studies show that higher levels of customer satisfaction lead to greater customer loyalty, which in turn results in better company performance. Outstanding marketing companies aim to delight customers by promising only what they can deliver and then delivering more than they promise.

The Digital Age: Online, Mobile, and Social Media Marketing

Digital and social media marketing refers to using digital marketing tools such as Web sites, social media, mobile apps and ads, online video, e-mail, and blogs that engage consumers anywhere, at any time, via their digital devices. Social media provides exciting opportunities to extend customer engagement and get people talking about a brand. Mobile marketing is the fastest-growing digital marketing platform. Marketers use mobile channels to stimulate immediate buying, make shopping easier, enrich the brand experience, or all of these. For example, Starbucks customers can use their mobile devices for everything from finding the nearest Starbucks and learning about new products to placing and paying for orders. Although online, social media, and mobile marketing offer huge potential, most marketers are still learning how to use them effectively. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy and mix.

1-5 Summary

Dramatic changes are occurring in the marketing arena. The digital age has created exciting new ways to learn about and relate to individual customers. As a result, advances in digital and social media have taken the marketing world by storm. Online, mobile, and social media marketing offer exciting new opportunities to target customers more selectively and engage them more deeply. The key is to blend the new digital approaches with traditional marketing to create a smoothly integrated marketing strategy and mix. The Great Recession caused consumers to rethink their buying priorities and bring their consumption back in line with their incomes. Even as the post-recession economy has strengthened, Americans are now showing an enthusiasm for frugality not seen in decades. The challenge is to balance a brand's value proposition with current times while also enhancing its long-term equity. In recent years, marketing has become a major part of the strategies for many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and even churches. Also, in an increasingly smaller world, many marketers are now connected globally with their customers, marketing partners, and competitors. Finally, today's marketers are also reexamining their ethical and societal responsibilities. Marketers are being called on to take greater responsibility for the social and environmental impacts of their actions. Pulling it all together, as discussed throughout the chapter, the major new developments in marketing can be summed up in a single concept: engaging customers and creating and capturing customer value. Today, marketers of all kinds are taking advantage of new opportunities for building value-laden relationships with their customers, their marketing partners, and the world around them.

Partnering with Other Company Departments

Each company department can be thought of as a link in the company's internal value chain. That is, each department carries out value-creating activities to design, produce, market, deliver, and support the firm's products. The firm's success depends not only on how well each department performs its work but also on how well the various departments coordinate their activities. Marketers must find ways to get all departments to "think consumer" and develop a smoothly functioning value chain. One marketing expert puts it this way: "True market orientation . . . means that the entire company obsesses over creating value for the customer and views itself as a bundle of processes that profitably define, create, communicate, and deliver value to its target customers.... Everyone must do marketing regardless of function or department." The value chain: These True Value ads recognize that everyone in the organization—from marketing research analyst, Jeff Alvarez to operations manager, Tom Statham—must contribute to helping the chain's customers handle their home improvement projects. They form the foundation for the brand's "Behind Every Project Is a True Value" positioning. True Value and "Start Right. Start Here" are registered trademarks of True Value Company. The print ads and images are copyrighted works of authorship of True Value Company. True Value's ability to help you "Start Right. Start Here" depends on purchasing's skill in developing the needed suppliers and buying from them at low cost. True Value's information technology people must provide fast and accurate information about which products are selling in each store. Their operations people must provide effective, low-cost merchandise handling and delivery.

Figure 1.5 Customer Relationship Groups

Figure 1.5 classifies customers into one of four relationship groups, according to their potential profitability and projected loyalty. Each of the four customer relationship groups requires a different relationship management strategy. The company will not gain anything by investing time and resources in developing relationships with strangers. For butterflies, the company should create satisfying and profitable transactions, capturing as much of their business as possible in the short time during which they buy from the company. Efforts to convert butterflies into loyal customers are rarely successful. True friends are loyal and have the potential to generate good profit for the company. The firm should make continuous relationship investments to delight these customers and nurture, retain, and grow them. Barnacles are highly loyal but not very profitable. There is a limited fit between their needs and the company's offerings. The company may be able to improve the profitability of barnacles by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be fired.

Creating Customer Loyalty and Retention

Loyal customers spend more and stay around longer. The value of the entire stream of purchases a customer makes over a lifetime of patronage is significant. Customer defections can be costly. Losing a customer means losing more than a single sale. It means losing that customer's lifetime value. For example, the average customer at Stew Leonard's supermarket spends about $100 a week, shops 50 weeks a year, and remains in the area for about 10 years. If this customer has an unhappy experience and switches to another supermarket, Stew Leonard's has lost $50,000 in lifetime revenue. The loss can be much greater if the disappointed customer shares the bad experience with other customers and causes them to defect. In fact, a company can lose money on a specific transaction but still benefit greatly from a long-term relationship. This means that companies must aim high in building customer relationships.

Rapid Globalization and Sustainable Marketing

Managers in countries around the world are increasingly taking a global, not just local, view of the company's industry, competitors, and opportunities. They are asking: What is global marketing? How does it differ from domestic marketing? How do global competitors and forces affect our business? To what extent should we "go global"? For example, a new Internet retailer finds itself receiving orders from all over the world, while at the same time, an American consumer goods producer introduces new products into emerging markets abroad. Marketers are reexamining their relationships with social values and responsibilities and with the very Earth that sustains us. Today's marketers are being called on to develop sustainable marketing practices. Corporate ethics and social responsibility have gained in importance. They seek ways to profit by serving immediate needs and the best long-run interests of their customers and communities.

Figure 2.7 SWOT Analysis: Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T)

Managing the marketing function begins with a complete analysis of the company's situation. The marketer should conduct a SWOT Analysis. This refers to an overall evaluation of the company's strengths (S), weaknesses (W), opportunities (O), and threats (T). Strengths include internal capabilities, resources, and positive situational factors that may help the company serve its customers and achieve its objectives. Weaknesses include internal limitations and negative situational factors that may interfere with the company's performance. Opportunities are positive factors or trends in the external environment that the company may be able to exploit to its advantage. Threats are negative external factors or trends that may present challenges to performance.

Figure 2.6 Managing Marketing: Analysis, Planning, Implementation, and Control

Managing the marketing process requires the four marketing management functions as illustrated in this figure. They include analysis, planning, implementation, and control. The company first develops company-wide strategic plans and then translates them into marketing and other plans for each division, product, and brand. Through implementation, the company turns the plans into actions. Control consists of measuring and evaluating the results of marketing activities and taking corrective action where needed. Finally, marketing analysis provides the information and evaluations needed for all the other marketing activities.

Market Segmentation and Market Targeting

Market segmentation refers to dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs. A market segment is a group of consumers who respond in a similar way to a given set of marketing efforts. In the car market, for example, consumers who want the biggest, most comfortable car regardless of price, make up one market segment. Consumers who care mainly about price and operating economy, make up another segment. Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.

Understanding the Marketplace and Customer Needs

Marketers need to understand customer needs and wants and the marketplace in which they operate. The five core customer and marketplace concepts are needs, wants, and demands, market offerings that include products, services, and experiences, value and satisfaction, exchanges and relationships, and markets. Each of these core concepts are discussed in detail in the following slides.

Marketing Control

Marketing control refers to measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved. This may require changing the action programs or even changing the goals. Operating control ensures that the company achieves the sales, profits, and other goals set out in its annual plan. It also involves determining the profitability of different products, territories, markets, and channels. Strategic control involves looking at whether the company's basic strategies are well matched to its opportunities.

Growth of Not-for-Profit Marketing

Marketing has become a major part of the strategies of many not-for-profit organizations, such as colleges, hospitals, museums, zoos, symphony orchestras, foundations, and even churches. They face stiff competition for support and membership. Sound marketing can help them attract membership, funds, and support. For example, Alex's Lemonade Stand Foundation is a not-for-profit organization with a special mission: "Fighting childhood cancer, one cup at a time." Government agencies have also shown an increased interest in marketing. For example, the U.S. military has a marketing plan to attract recruits to its different services. Various government agencies are now designing social marketing campaigns to encourage energy conservation and concern for the environment or discourage smoking, illegal drug use, and obesity.

What Is Marketing?

Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The dual goal of marketing is to attract new customers by promising superior value and to keep and grow current customers by delivering satisfaction. Sound marketing is critical to the success of every organization. Marketing is used by large for-profit firms, such as Google, Target, Coca-Cola and Microsoft as well as not-for-profit organizations, such as colleges, hospitals, museums, symphony orchestras, and even churches.

1-1 Summary

Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. The marketing process involves five steps. The first four steps create value for customers. First, marketers need to understand the marketplace and customer needs and wants. Next, marketers design a customer value-driven marketing strategy with the goal of getting, engaging, and growing target customers. In the third step, marketers construct a marketing program that actually delivers superior value. All of these steps form the basis for the fourth step: engaging customers, building profitable customer relationships, and creating customer delight. In the final step, the company reaps the rewards of strong customer relationships by capturing value from customers.

Designing a Customer Value-Driven Marketing Strategy

Marketing management is the art and science of choosing target markets and building profitable relationships with them. To design a winning marketing strategy, the marketing manager must answer two important questions. First, what's the target market? Second, what's the value proposition? The company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing). The company must decide how it will differentiate and position itself in the marketplace. A brand's value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. For example, Vine gives you "the best way to see and share life in motion" through "short, beautiful, looping videos in a simple and fun way for your friends and family to see" and Facebook helps you "connect and share with the people in your life." There are five alternative concepts under which organizations design and carry out their marketing strategies. The production concept holds that consumers will favor products that are available and highly affordable. The product concept holds that consumers will favor products that offer the most quality, performance, and features. The selling concept refers to the idea that consumers will not buy enough of the firm's products unless the firm undertakes a large-scale selling and promotion effort. The marketing concept is a philosophy in which achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do. The final alternative is the societal marketing concept which holds the idea that a company's marketing decisions should consider consumers' wants, the company's requirements, consumers' long-run interests, and society's long-run interests.

Exchanges and Relationships

Marketing occurs when people decide to satisfy their needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return. Marketing consists of actions taken to create, maintain, and grow desirable exchange relationships with target audiences involving a product, service, idea, or other object. Companies want to build strong relationships by consistently delivering superior customer value. In the broadest sense, the marketer tries to bring about a response to some market offering. The response may be more than simply buying or trading products and services. For example, a political candidate wants votes; a church wants membership; an orchestra wants an audience; and a social action group wants idea acceptance.

Contents of a Marketing Plan

Marketing planning involves choosing marketing strategies that will help the company attain its overall strategic objectives. The plan begins with an executive summary that quickly reviews major assessments, goals, and recommendations. The main section of the plan presents a detailed SWOT analysis of the current marketing situation, as well as, potential threats and opportunities. The plan next states major objectives for the brand and outlines the specifics of a marketing strategy for achieving them. A marketing strategy consists of specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels. It outlines how the company intends to create value for target customers in order to capture value in return. In this section, the planner explains how each strategy responds to the threats, opportunities, and critical issues spelled out earlier in the plan. Additional sections of the marketing plan lay out an action program for implementing the marketing strategy along with the details of a supporting marketing budget. The last section outlines the controls that will be used to monitor progress, measure return on marketing investment, and take corrective action.

Planning Marketing: Partnering to Build Customer Relationships

Marketing plays a key role in the company's strategic planning in several ways. First, marketing provides a guiding philosophy—the marketing concept—that suggests the company strategy should revolve around creating customer value and building profitable relationships with important consumer groups. Second, marketing provides inputs to strategic planners by helping to identify attractive market opportunities and assess the firm's potential to take advantage of them. Finally, within individual business units, marketing designs strategies for reaching the unit's objectives.

Figure 2.4 Managing Marketing Strategy and the Marketing Mix

Marketing strategy involves two key questions: Which customers will we serve (segmentation and targeting)? How will we create value for them (differentiation and positioning)? Then the company designs a marketing program—the four Ps—that delivers the intended value to targeted consumers. At its core, marketing is all about creating customer value and profitable customer relationships.

2-1 Summary

Strategic planning sets the stage for the rest of the company's planning. Marketing contributes to strategic planning, and the overall plan defines marketing's role in the company. Strategic planning involves developing a strategy for long-run survival and growth. It consists of four steps: (1) defining the company's mission, (2) setting objectives and goals, (3) designing a business portfolio, and (4) developing functional plans. The company's mission should be market oriented, realistic, specific, motivating, and consistent with the market environment. The mission is then transformed into detailed supporting goals and objectives, which in turn guide decisions about the business portfolio. Then each business and product unit must develop detailed marketing plans in line with the company-wide plan.

Building Customer Equity

The aim of customer relationship management is to produce high customer equity. This refers to the total combined customer lifetime values of all of the company's current and potential customers. It's a measure of the future value of the company's customer base. Clearly, the more loyal the firm's profitable customers are the higher its customer equity. Customer equity may be a better measure of a firm's performance than current sales or market share. Whereas sales and market share reflect the past, customer equity suggests the future. For example, though Cadillac had a huge share of the luxury car market, most of its buyers were in the older age brackets and average customer lifetime value was falling. Many Cadillac buyers were on their last cars. Thus, although Cadillac's market share was good, its customer equity was not. In recent years, Cadillac has struggled to reinvent its target market by focusing on a younger generation of consumers. To increase customer equity, Cadillac is making the classic car cool again among younger buyers, encouraging consumers to "Dare Greatly."

Figure 2.2 The BCG Growth-Share Matrix

The best-known portfolio-planning method was developed by the Boston Consulting Group (BCG), a leading management consulting firm. This BCG Growth-Share matrix shows the classification of company's SBUs. Market growth rate provides a measure of market attractiveness. Relative market share serves as a measure of company strength in the market. The Growth-Share Matrix defines four types of SBUs: Stars are high-growth, high-share businesses or products. Cash cows are low-growth, high-share businesses or products. Question marks, are low-share business units in high-growth markets. Dogs are low-growth, low-share businesses and products. The 10 circles in this growth-share matrix would represent a company's 10 current SBUs. The company must decide how much it will invest in each product or business SBU. It must decide whether to build, hold, harvest or divest.

Marketing Department Organization

The company must design a marketing organization that can carry out marketing strategies and plans. Modern marketing departments can be arranged in several ways. The most common form of marketing organization is the functional organization. Under this organization, different marketing activities are headed by a functional specialist. A company that sells across the country or internationally often uses a geographic organization. Its sales and marketing people are assigned to specific countries, regions, and districts. A company with different products or brands may create a product management organization. Under this approach, a product manager develops and implements a complete strategy and marketing program for a specific product or brand. A market or customer management organization approach is best suited for companies that sell one product line to many different types of markets and customers who have different needs and preferences. Large companies that produce different products, flowing into many different geographic and customer markets, employ a combination of the functional, geographic, product, and market organization forms. More and more, companies are shifting their brand management focus toward customer management—moving away from managing only product or brand profitability and toward managing customer profitability and customer equity.

Growth-Share Matrix

The growth-share matrix is a portfolio-planning method that evaluates a company's SBUs in terms of market growth rate and relative market share. As time passes, SBUs change their positions in the growth-share matrix. Many SBUs start out as question marks and move into the star category if they succeed. They later become cash cows as market growth falls, and then finally die off or turn into dogs toward the end of the life cycle. There are limitations for the BCG approach. It can be difficult, time consuming, and costly to implement. Management may find it difficult to define SBUs and measure market share and growth. In addition, these approaches focus on classifying current businesses but provide little advice for future planning.

Portfolio Analysis

The major activity in strategic planning is business portfolio analysis, which is the process by which management evaluates the products and businesses that make up the company. There are two steps for analyzing portfolios. Management's first step is to identify the key businesses that make up the company, called strategic business units (SBUs). An SBU can be a company division, a product line within a division, or sometimes a single product or brand. The company next assesses the attractiveness of its various SBUs and decides how much support each deserves. The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment. For this reason, most standard portfolio analysis methods evaluate SBUs on two important dimensions: the attractiveness of the SBU's market or industry and the strength of the SBU's position in that market or industry.

Figure 1.6 An Expanded Model of the Marketing Process

This figure represents a map for the entire marketing process. Throughout the marketing process, marketers practice customer relationship management to create customer satisfaction and delight. In creating customer value and relationships, a firm must work closely with marketing partners both inside the company and throughout its marketing system. Thus, beyond practicing good customer relationship management, firms must also practice good partner relationship management.

Preparing an Integrated Marketing Plan and Program

The marketing mix is the set of marketing tools, the four Ps, the firm uses to implement its marketing strategy. The major marketing mix tools are product, price, place, and promotion. To deliver on its value proposition, the firm must first create a need-satisfying market offering (product). It must then decide how much it will charge for the offering (price) and how it will make the offering available to target consumers (place). Finally, it must communicate with target customers about the offering and persuade them of its merits (promotion). The firm must blend each marketing mix tool into a comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers.

Figure 2.5 The Four Ps of the Marketing Mix

The marketing mix is the set of tactical marketing tools that the firm blends to produce the response it wants in the target market. This figure shows the four marketing tools, the four Ps. 1.Product is the goods-and-services combination the company offers to the target market. ● 2.Price is the amount of money customers must pay to obtain the product. ● 3.Place includes the company activities that make the product available to target consumers. ● 4.Promotion refers to activities that communicate the merits of the product and persuade target customers to buy it. An effective marketing program blends the marketing mix elements into an integrated marketing program designed to achieve the company's marketing objectives by delivering value to consumers.

Figure 2.3 The Product/Market Expansion Grid

The product/market expansion grid refers to a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification. Companies must first consider if they can achieve deeper market penetration. That is, make more sales to current customers without changing the original products. Second, companies must consider possibilities for market development. This refers to identifying and developing new markets for its current products. Third, companies could consider product development by offering modified or new products to current markets. Finally, companies might consider diversification, which refers to starting up or buying businesses beyond the firm's current products and markets.

Customer Value-Driven Marketing Strategy

The strategic plan defines the company's overall mission and objectives. Thus, marketing strategy refers to the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships. Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control, which are product, price, place, and promotion. To find the best marketing strategy and mix, the company engages in marketing analysis, planning, implementation, and control. Through these activities, the company watches and adapts to the factors and forces in the marketing environment.

Figure 1.3 The Selling and Marketing Concepts Contrasted

This figure contrasts the selling concept and the marketing concept. The selling concept takes an inside-out view that focuses on existing products and heavy selling. The aim is to sell what the company makes rather than making what the customer wants. The marketing concept takes an outside-in view that focuses on satisfying customer needs as a path to profits. It starts with a well-defined market, focuses on customer needs, and integrates all the marketing activities that affect customers. As Southwest Airlines' colorful founder puts it, "We don't have a marketing department, we have a customer department."

Figure 1.4 Three Considerations Underlying the Societal Marketing Concept

This figure shows that companies should balance three considerations in setting their marketing strategies: company profits, consumer wants, and society's interests. For example, Cosmetics retailer Lush knows that doing what's right benefits both customers and the company. "We believe in happy people making happy soap," says the company's mission statement.

Figure 1.2 A Modern Marketing System

This figure shows the main elements in a modern marketing system. Marketing involves serving a market of final consumers in the face of competitors. Each party in the system adds value for the next level. The arrows represent relationships that must be developed and managed. Thus, a company's success at building profitable relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers. For example, Walmart cannot fulfill its promise of low prices unless its suppliers provide merchandise at low costs.

Figure 2.8 Marketing Return on Investment

This figure views marketing expenditures as investments that produce returns in the form of more profitable customer relationships. Marketing investments result in improved customer value and satisfaction, which in turn increases customer attraction and retention. This increases individual customer lifetime values and the firm's overall customer equity. Increased customer equity, in relation to the cost of the marketing investments, determines return on marketing investment.

Figure 1.1 The Marketing Process: Creating and Capturing Customer Value

This important figure shows marketing in a nutshell. By creating value for customers, marketers capture value from customers in return. This five-step process forms the marketing framework for the rest of the chapter and the remainder of the text. This figure presents a simple, five-step model of the marketing process for creating and capturing customer value. In the first four steps, companies work to understand consumers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value. The rewards are in the form of sales, profits, and long-term customer equity.

Partnering with Others in the Marketing System

To create customer value, the firm needs to look beyond its own internal value chain and into the value chains of its suppliers, distributors, and, ultimately, its customers. Companies are partnering with other members of the supply chain to improve the performance of the customer value delivery network. The customer value delivery network partners with each other to improve the performance of the entire system in delivering customer value. For example, Ford's performance against Toyota depends on the quality of Ford's overall value delivery network versus Toyota's. Even if Ford makes the best cars, it might lose in the marketplace if Toyota's dealer network provides a more customer-satisfying sales and service experience.

1-3 Summary

To design a winning marketing strategy, the company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will cultivate (target marketing). Next, the company must decide how it will serve targeted customers (how it will differentiate and position itself in the marketplace). Marketing management can adopt one of five competing market orientations. The production concept holds that management's task is to improve production efficiency and bring down prices. The product concept holds that consumers favor products that offer the most in quality, performance, and innovative features; thus, little promotional effort is required. The selling concept holds that consumers will not buy enough of an organization's products unless it undertakes a large-scale selling and promotion effort. The marketing concept holds that achieving organizational goals depends on determining the needs and wants of target markets and delivering the desired satisfactions more effectively and efficiently than competitors do. The societal marketing concept holds that generating customer satisfaction and long-run societal well-being through sustainable marketing strategies is key to both achieving the company's goals and fulfilling its responsibilities.

2-5 Summary

To find the best strategy and mix and to put them into action, the company engages in marketing analysis, planning, implementation, and control. The main components of a marketing plan are the executive summary, the current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action programs, budgets, and controls. Planning good strategies is often easier than carrying them out. To be successful, companies must also be effective at implementation—turning marketing strategies into marketing actions. Marketing departments can be organized in one way or a combination of ways: functional marketing organization, geographic organization, product management organization, or market management organization. In this age of customer relationships, more and more companies are now changing their organizational focus from product or territory management to customer relationship management. Marketing organizations carry out marketing control, both operating control and strategic control. More than ever, marketing accountability is the top marketing concern. Marketing managers must ensure that their marketing dollars are being well spent. In a tighter economy, today's marketers face growing pressures to show that they are adding value in line with their costs. In response, marketers are developing better measures of marketing return on investment. Increasingly, they are using customer-centered measures of marketing impact as a key input into their strategic decision making.

Customer-Engagement Marketing

Today's companies are using online, mobile, and social media to refine their targeting and to engage customers more deeply and interactively. Customer engagement marketing refers to fostering direct and continuous customer involvement in shaping brand conversations, brand experiences, and brand community to make the brand a meaningful part of consumers' conversations and lives. Internet and social media have given a huge boost to customer-engagement marketing. Newly empowered consumers have more information about brands, and they have numerous digital platforms for sharing their brand views with others. Greater consumer empowerment means that companies must practice marketing by attraction which is creating market offerings and messages that engage consumers rather than interrupt them. For example, Starbucks has more than 38 million Facebook fans, and Coca-Cola has more than 94 million. The key to engagement marketing is to find ways to enter consumers' conversations with engaging and relevant brand messages. Simply posting a humorous video, creating a social media page, or hosting a blog isn't enough. Successful engagement marketing means making relevant and genuine contributions to consumers' lives and conversations. Consider T-shirt and apparel maker Life is good which has an authentic, engagement-worthy sense of purpose: spreading the power of optimism. The brand is about helping people to open up, create relationships, and connect with other people.

2-3 Summary

Under the strategic plan, the major functional departments—marketing, finance, accounting, purchasing, operations, information systems, human resources, and others—must work together to accomplish strategic objectives. Marketing plays a key role in the company's strategic planning by providing a marketing concept philosophy and inputs regarding attractive market opportunities. Within individual business units, marketing designs strategies for reaching the unit's objectives and helps to carry them out profitably. Marketers alone cannot produce superior value for customers. Marketers must practice partner relationship management, working closely with partners in other departments to form an effective value chain that serves the customer. And they must also partner effectively with other companies in the marketing system to form a competitively superior value delivery network.

Partner Relationship Management

When it comes to creating customer value and building strong customer relationships, today's marketers know that they can't go it alone. They must work closely with a variety of marketing partners. In addition to customer relationship management, marketers must also be good at partner relationship management. Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Partners within the firm include cross-functional teams. Rather than letting each department go its own way, firms must link all departments in the cause of creating customer value. Marketers must also partner with suppliers, channel partners, and others outside the company. Through supply chain management, companies today are strengthening their connections with partners all along the supply chain.